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Save Energy, and Then Save on Taxes

Q. I’ve been told that I’m going to need a new water heater soon. If I buy one now, can I get a tax break?

A. Yes, thanks to the American Recovery and Reinvestment Act of 2009, also known as the stimulus plan.

Certain energy-efficient home improvements, such as a water heater, qualify for a tax credit that is subtracted from what you owe the IRS, or added to your refund. Other products that earn the energy-saving tax break include windows, insulation, doors, heat pumps, central air conditioners, wood stoves and oil furnaces.

The products must be installed between Jan. 1, 2009, and Dec. 31, 2010. Taxpayers can claim up to 30 percent of the cost of energy-saving improvements to their primary residence, up to a maximum $1,500. Make sure you keep receipts of all purchases for easy reference come tax time.

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