AUSTIN – This weekend marks the second annual Energy Star Sales Tax Holiday – an event designed to help Texas consumers buy energy efficient appliances that will help lower their utility bills. The tax holiday provides a great incentive to help consumers replace old, energy-sapping appliances and join statewide energy conservation efforts.
During the three-day tax holiday, May 23-25, Texas shoppers get a break from state and local sales taxes when they purchase certain energy-efficient appliances and other household equipment bearing an Energy Star label. Shoppers can expect to save about $3 million overall in state and local sales taxes during the event.
The annual savings in average utility costs can really add up after purchasing an Energy Star product. A programmable thermostat can yield $204 in annual savings. A new, energy-efficient central air conditioner unit can save $190 per year. An Energy Star clothes washer can save up to $55 annually.
Typical Energy Star product annual savings include:
•Programmable Thermostats – $204
• Clothes Washer – $55
• Ceiling Fans (three lights) – $33
• Ceiling Fans (no lights) – $4
• Dehumidifiers – $27
• Room or Window Air Conditioners – $17
• Refrigerator – $13
• Dishwasher – $7
• Light Bulbs (compact fluorescent over incandescent) – $6/bulb
• Central Air Conditioner – $190 – based on 2,209 cooling hours per year in Houston, which is average for the state of Texas.
The savings are based on an average Texas electric rate of $0.126 per KWh, an average gas rate of $1.64 per therm and an average water rate of $0.004721 per gallon.
“This weekend, Texans have the opportunity to cash in not once, but twice, on energy-efficient appliances,” Texas Comptroller Susan Combs said.
The Energy Star Sales Tax Holiday applies only to the following equipment: air conditioners priced less than $6,000, refrigerators priced less than $2,000, ceiling fans, incandescent and fluorescent light bulbs, clothes washers, dishwashers, dehumidifiers and programmable thermostats, along with installation and delivery charges for these products.
More information is at http://www.window.state.tx.us/taxinfo/sales/faq_energy_star.html.
More information about Energy Star products – including additional rebates and credits – can be found at www.energystar.gov.
Energy Star Holiday Frequently Asked Questions of the Comptroller’s Office (for complete remarks, visit the comptroller’s Web site)
1. Your Energy Star publication states “Texas shoppers get a break from state and local sales and use taxes … ” Could you clarify who qualifies as a “Texas shopper”?
“Texas shopper” refers to anyone in Texas buying these products on the stated weekend at a store in Texas or from an Internet or catalog seller engaged in business in this state. The term includes homebuilders, real estate developers, dealers, service providers and contractors. The purchased items may be held in inventory until ready for use. There is no limit on the number of qualifying items one can purchase during this sales tax holiday.
2. Do purchasers need to provide an exemption certificate or any other documentation to claim this exemption?
No, purchasers do not need to issue an exemption certificate or any other type of documentation to sellers to buy qualifying items tax-free during the sales tax holiday period.
3. Can purchasers from outside of Texas make tax-free purchases of qualifying products during the sales tax holiday?
Yes, out-of-state purchasers may purchase qualifying items tax-free during the sales tax holiday.
Texas tax is not due on items sold for use outside Texas provided the seller ships or delivers the taxable items to an out-of-state location. The state in which the purchaser takes possession or makes use of the item may impose its sales or use taxes on the transaction.
4. I’ve noticed some Energy Star rated items I need are not on the list. Why?
The items eligible for the exemption during the Energy Star holiday is limited to only those items specifically listed in Tax Code Section 151.333. The Energy Star Sales Tax Holiday applies only to the following appliances and household equipment:
• air conditioners priced less than $6,000,
• ceiling fans,
• incandescent and fluorescent light bulbs,
• programmable thermostats,
• refrigerators priced less than $2,000 and
• clothes washers.
5. A lot of Texans may need a new water heater. Why were water heaters not added to the list? Also, it seems silly to exempt clothes washers but not clothes dryers.
The U.S. Department of Energy presently has not qualified water heaters for the Energy Star label. Also, the Energy Star designation is not applied to clothes dryers since there is little difference in the energy use between models. Combination clothes washer and dryer units will qualify for the exemption if the appliance is classified as a clothes washer by Energy Star and if the model number is listed on the Energy Star qualified clothes washer product list available online.
6. Are heat pumps considered air conditioners for the purpose of the upcoming Energy Star sales tax holiday?
No. Heat pumps and air conditioners are defined and listed separately in the information provided on the Energy Star Web site. Because Energy Star differentiates between the two types of equipment and the statute specifically states that the exemption applies only to the listed products, heat pumps do not qualify – even if they can be used to cool a home.
7. A central air conditioning system consists of several components. If I replace an air conditioner component in an existing system with a new Energy Star rated component, will that part qualify for the sales tax holiday exemption?
No. The exemption does not apply to individual air conditioning components. The exemption is for the purchase of air conditioning units priced at $6,000 or less.
8. Can a wine refrigerator, kegerator or residential beverage chiller qualify for the sales tax holiday exemption?
No. Wine cooler refrigerators, beer coolers, kegerators and other beverage coolers cannot qualify for Energy Star designation and therefore cannot be purchased tax-free during the sales tax holiday. The Energy Star program only qualifies residential refrigeration products that are included in the Department of Energy’s appliance efficiency standards program.
9. Do freezers or stoves qualify for the exemption?
No. Freezers and stoves are not included in the statutory list of products eligible for the Energy Star sales tax holiday exemption.
10. Do attic fans qualify for the exemption?
No. The EPA does not label attic fans because they use more energy than alternative attic cooling methods such as passive ventilation. Therefore attic fans do not qualify for the exemption.
11. Do mini-fridges qualify for exemption from tax during the sales tax holiday?
Yes. Compact or mini-fridges priced less than $2,000 and designated with the Energy Star logo may be purchased tax-free during the Memorial Day weekend sales tax holiday.
12. Does the comptroller’s office administer any programs that provide credits for energy-efficient home improvement?
No. We recommend that you contact local representatives in your area to see if there are any local energy savings programs in place. You may also find information about various products and programs through the Energy Star Web site.
13. Do qualifying items have to be bought and delivered to (or otherwise received by) purchasers during the sales tax holiday period in order to qualify for the exemption?
No. The exemption applies to all sales of qualifying products made during the sales tax holiday period. A sale is considered made during the sales tax holiday period if the items are both paid for and delivered to the purchaser during the exemption period; or if the purchaser orders and pays for the item and the retailer accepts the order during the exemption period for immediate shipment, even if delivery is made after the exemption period.
14. Do delivery or shipping and handling charges qualify for the exemption?
It depends. Transportation charges to deliver an item sold that are billed by the seller to the purchaser are part of the final selling price of products sold during the holiday, even if separately stated on the bill or invoice. Transportation charges billed by the seller to the purchaser are exempt if the item sold is exempt.
15. Are installation charges for free-standing or mobile items also exempt? For example, there are charges to set appliances in place and make the necessary connections for the clothes washers, refrigerators, portable dishwashers and window or room air conditioning units to work. Would these charges qualify for the Energy Star sales tax holiday exemption?
Provided an item retains its identity as tangible personal property after installation, the installation charges billed by the seller of the item also qualify for the sales tax holiday exemption – even if the installation is performed after the holiday period is concluded.
16. Are installation charges for items that will be permanently installed in real property such as ceiling fans, built-in refrigerators, programmable thermostats, dishwashers and central air conditioning units taxable?
It depends. The installation of an item will be considered an improvement to real property if it is essential to the integrity of the property by virtue of being embedded in or permanently affixed to the property. The items listed in the question are generally installed to become improvements to realty.
The taxability of installation charges constituting an improvement to realty is determined by several variables such as the type of contract, lump sum or separated, between the installer and the customer and whether the property is residential or nonresidential.
17. Do all sellers located in the state of Texas have to participate in this event, the Energy Star Tax Holiday?
All sellers engaged in business in Texas that sell qualifying Energy Star products should comply with the new law.
Texas Tax Code Section 151.333(c) states: “The sale of an energy-efficient product to which this section applies is exempted from the taxes imposed by this chapter if the sale takes place during a period beginning at 12:01 a.m. on the Saturday preceding the last Monday in May (Memorial Day) and ending at 11:59 p.m. on the last Monday in May.
18. Do rentals and leases of qualifying equipment qualify for the Energy Star holiday exemption?
Rentals and leases of qualifying Energy Star products, including “rent to own” contracts, can qualify for exemption during the new Energy Star sales tax holiday. Under 151.005 the definition of “sale” includes the exchange, barter, lease, or rental of tangible personal property. Therefore, rental and lease contracts (for qualifying items) entered into during the sales tax holiday Memorial Day weekend will qualify for the exemption. The exemption will only apply to the specified rental or lease period designated by the contract. Extensions or renewals of contracts will not qualify unless they occur during another Energy Star holiday.
19. Can a purchaser receive a refund of sales and use taxes paid on purchases of qualifying Energy Star equipment that were made before the sales tax holiday?
No. The sales tax holiday exemption applies only to sales of qualifying Energy Star rated products made during the period beginning at 12:01 a.m. on the Saturday preceding the last Monday in May (Memorial Day) and ending at 11:59 p.m. on the last Monday in May. Customers who purchase eligible items before or after the designated sales tax holiday period cannot receive a refund of the taxes unless another exemption applies.
Reliant Energy Five Tips for Improving Your Home’s Summer Energy Efficiency
(1) Help your air-conditioner do its job. Keep windows and blinds closed to block sunlight in the summer, as sunlight can increase demand on your air-conditioner and essentially, your air-conditioner can be responsible for 60-70 percent of your summertime electricity bill. Contact a professional to perform preventative maintenance on the air-conditioning system so that it can run more efficiently and help avoid outages in the summer.
(2) Caulk and weatherstrip areas around windows and doors. A quarter-inch gap at the bottom of a standard door can equal the energy loss of a 3-inch by 3-inch hole in the wall. Weatherstripping kits cost about $10 and are an easy way to save money on your bill while helping keep your home comfortable.
(3) Check attic insulation. Cool spring weather is one of the best times to go up into your attic and check insulation. You want R-38 insulation in attic areas and R-22 in hot walls and vaulted or cathedral ceilings. Ideally, you want to have 12-16 inches of ceiling insulation. If your home was built before 1980 or has less than 6 inches of ceiling insulation, insulation should be a top priority, as up to 40 percent of your heating and cooling dollars can be lost if a home isn’t properly insulated.
(4) Install a programmable thermostat. During the summer months, set your thermostat to 78 degrees for cooling and maximum energy efficiency. Every degree below 78 in the summer may increase your cooling costs from 5-7 percent per degree. A programmable thermostat can be purchased at most home improvement stores and can be set to automatically increase the temperature when you are away from home during the day and cool it to a comfortable level just before you return in the evening.
(5) Switch to compact fluorescent light bulbs. One of the easiest home energy-efficiency improvements you can make is replacing an incandescent light bulb with a compact fluorescent light. CFLs use about one-fourth to one-third as much electricity as incandescent bulbs, they “burn” much cooler and can last years longer than incandescents. The heat production from incandescent light bulbs can increase room temperature, causing your air-conditioning unit to run harder.