Rural Missouri Magazine

Stimulating efficiency
New federal money for home improvements means savings for Missourians of all income levels

by Bob McEowen

David Sowers, a weatherization expert with the Ozark Area Community Action Corp., passes insulation batts to a crew member working in the crawl space of a home in Springfield. The new federal stimulus package President Obama signed into law Feb. 17 contains significant increases in funding for the low-income home weatherization program.

Turn on the news these days and you’ll hear one story after another about the federal government bailing out corporations and propping up banks. For most of us, there’s little consolation in the effort to rescue failing institutions and stimulate the economy. We wonder if the various recovery efforts have any bearing on our lives.

For Missouri Highway Patrolman Coby Holzschuh and his wife, Janie, the federal stimulus package means money in their pockets and reduced energy bills for years to come. Tax incentives contained in “The American Recovery and Reinvestment Act of 2009” will help them recoup 30 percent of the cost of a new, super-efficient ground-source heat pump recently installed in their nine-year-old home near Westphalia.

“It’s a huge incentive. It just helps out tremendously,” says Holzschuh, whose decision to replace a costly propane furnace was also influenced by rebates his electric co-op offered.

The federal stimulus package President Obama signed into law Feb. 17 allows homeowners to deduct nearly one-third of the cost of certain energy-savings technologies from their income taxes. Additional incentives include smaller tax credits for new windows, doors and other upgrades and a significant increase in funding for home weatherization programs to benefit low-income Americans.

Cheat the taxman

The federal stimulus package provides tax credits for energy-saving improvements made in 2009 and 2010. This is money in the bank because a tax credit actually reduces the amount of tax you owe.

Install new energy-efficient windows or doors, add insulation or replace an aging heating and cooling system, and the government will credit you 30 percent of the cost — up to $1,500 — off your taxes. These incentives triple previous tax credits, available in 2006-07 (but not 2008), which only allowed taxpayers to claim $500 worth of expenses.

Tax incentives for biomass stoves — which burn wood, corn and other organic fuels — also are increased from $300 to the same 30 percent/$1,500 credit as other energy-saving technologies.

As might be expected from something written by Congress, there are a lot of “ifs” and “onlys” in the new law, so homeowners will want to check with tax professionals, knowledgeable contractors, home supply centers or the Web site to make sure planned improvements qualify. Also, most of the incentives only apply to improvements to existing residences. Install energy-efficient windows and doors in a new home, and all you’ll get are the energy savings these upgrades provide.

A crew from Rehagen Heating and Cooling buries pipes used in a geothermal heat pump system at a home near Westphalia. New tax rules allow homeowners to deduct 30 percent of the cost of these ultra-efficient heat pumps from their taxes, while rebates offered by some Missouri electric co-ops add even more savings.

Big savings underfoot

While saving $1,500 on home improvements is always welcome, the really big savings come with the adoption of the latest technology.

The new federal stimulus places no dollar limits on tax credits for wind and solar energy systems or geothermal heat pumps installed in 2009 and 2010. No matter what the price, the federal government will credit you 30 percent of the cost on your tax bill. Furthermore, these incentives apply to new construction as well as to existing homes.

Wind and solar technologies often get the headlines, but in Missouri — where wind speeds are marginal and solar energy only averages about five hours of useable sunlight per day — the real performer is the ground-source or geothermal heat pump. These systems have proven to be remarkably efficient in Missouri’s climate and save homeowners a significant amount of money every month compared to conventional equipment.

“An electric furnace might cost $2,000 a year to operate. Propane is going to be higher. The geothermal system would cost approximately $600,” says Mark Boyer, manager of member services for Three Rivers Electric Cooperative, which has 1,200 ground-source heat pumps operating on its 21,000-member system.

While the energy savings of a geothermal heat pump is well known, the high cost of these systems has forced many homeowners to choose less-efficient options. A 30 percent tax credit changes the equation. Also, many Missouri electric cooperatives offer generous rebates that can reduce the cost of a typical installation by $3,500 or more.

Combine no-cap tax credits with co-op rebates and a homeowner could save nearly half the $22,000 cost of a typical geothermal heat pump installation in a new home.

Homeowners who purchased a geothermal heat pump last year should note that the so-called “TARP” fund, or Troubled Asset Relief Program, passed in October, allows up to $2,000 of tax credits for geothermal systems installed in 2008.

Help for those in need

When money is tight, it’s tough just to pay the utility bill, much less fund improvements that could reduce energy consumption. To help, the federal stimulus package includes an unprecedented increase in funding for home weatherization.

Last year, Congress appropriated $220 million for energy-efficiency upgrades for low-income individuals nationwide. The stimulus package raises funding during the next two years to a whopping $5 billion — including $128 million in Missouri.

In addition, more people will qualify as the new law raises the eligibility ceiling to 200 percent of the federal poverty level. The weatherization program is now an option for an individual with an annual income less than $21,000, a single parent with two kids earning less than $36,000 or a family of four that makes less than $44,000.

“With them raising the income limits, that’s going to include a lot of the working families that weren’t eligible before who really need the help,” says Todd Steinmann, who administers the low-income home weatherization program for the Ozark Area Community Action Corporation.

Based in Springfield, OACAC is one of 18 agencies that provides home weatherization services for the Missouri Department of Natural Resources. A typical project includes sealing air leaks, adding insulation and making minor repairs to windows and doors. According to the DNR, the upgrades typically result in a 13 percent savings in energy costs.

OACAC, which serves a 10-county area in southwest Missouri, weatherizes about 20 homes each month. Steinman says that with increased funding from the stimulus package, he hopes to add two additional crews and hire contractors to weatherize 150 homes every month for the next two years.

Americans will likely debate the merits of The American Recovery and Reinvestment Act of 2009 for years to come. One thing not in question, though, is that reducing energy consumption is a major priority under the legislation.

No matter their income level, every American uses energy to heat and cool their home. And no matter what their income, the stimulus package offers help to Americans who want to reduce their energy consumption.

For more information about energy-related tax incentives in The American Recovery and Reinvestment Act of 2009, log on to For information about rebates on ground-source heat pumps, contact your local electric cooperative. To learn about the low-income home weatherization program, contact the community action agency in your area or log on to

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