The new $300 Energy Tax Credit Bill applies to energy efficient gas
water weaters with an energy rating of 0.80. Most Bosch Gas Tankless
Water Heaters and Takagi Water Heaters meet the requirements of this bill.
The Energy Tax Credit starts January 1, 2006 and will continue
through December 31, 2007.
For more information on the bill, check out the
U.S. Department of Energy website.
What is a tax credit?
You don't receive an income tax credit
when you buy the product, like an instant rebate. You claim the credit on your federal income tax
form at the end of the year. The credit then increases the tax refund you receive or decreases the
amount you have to pay.
Tax credits vs. tax deductions.
In general a tax credit is
more valuable than a similar tax deduction. A tax credit reduces the tax
you pay, dollar-for-dollar. Tax deductions – such as those for home
mortgages and charitable giving, for example – lower your taxable income.
If you are in the 30 percent tax bracket, your income tax is reduced by
30 percent of the value of a tax deduction. But a tax credit reduces your
federal income tax by 100 percent of the amount of the credit.
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