Income Tax Deduction for Energy-Efficient Products

If you buy qualifying energy-efficient equipment in Virginia, you can deduct from your taxable personal income 20% of the sales tax you paid, up to a $500 cap. Eligible items include clothes washers, dishwashers, standard-size refrigerators, room and central air conditioners, certain heat pumps, water heaters, oil boilers and furnaces, fuel cells, and programmable thermostats, and each must meet the stated efficiency ratings. Claim it on your state income tax return and keep your purchase receipts showing the sales tax paid.

Customers who buy and install qualifying efficient equipment can reduce their Virginia taxable income by 20% of the sales tax paid, up to $500, which can help make higher-efficiency upgrades more appealing. Equipment must meet specific efficiency thresholds, such as a central air conditioner SEER of at least 13.5, an advanced gas or oil water heater energy factor of at least 0.65, or an advanced oil boiler or furnace AFUE of at least 85. Itemize the equipment and sales tax on invoices so customers can document their deduction, and refer them to the Virginia Department of Taxation for filing questions.

This is a Virginia personal income tax deduction equal to 20% of sales taxes paid on qualifying energy-efficient products, capped at $500, and it applies to the residential sector. Covered equipment includes clothes washers, dishwashers, standard-size refrigerators, room air conditioners, programmable thermostats, and specified fuel cells, heat pumps, water heaters, central air conditioners, and oil-fired boilers and furnaces, each with minimum efficiency criteria. It operates as a tax expenditure through the state income tax system rather than a funded grant program, and it targets homeowners and other residential taxpayers purchasing efficient equipment.