Builder Tax Credits - up to $2000 Home builders are eligible for a $2,000 tax credit for a new energy efficient home that achieves 50% energy savings for heating and cooling over the 2004 International Energy Conservation Code (IECC) and supplements. At least 1/5 of the energy savings must come from building envelope improvements. This credit also applies to contractors of manufactured homes conforming to Federal Manufactured Home Construction and Safety Standards. Eligible contractors need to fill out IRS Form 8908 to get the tax credit. The IRS has provided the following guidance regarding the tax credits for constructing energy efficient new homes available under the Energy Policy Act of 2005: IRS Notice 2006–27 provides guidance for the credit for building energy efficient homes other than manufactured homes. IRS Notice 2006–28 provides guidance for the credit for building energy efficient manufactured homes. The New HERS Index The HERS Index is a scoring system established by the Residential Energy Services Network (RESNET) in which a home built to the specifications of the HERS Reference Home (based on the 2006 International Energy Conservation Code) scores a HERS Index of 100, while a net zero energy home scores a HERS Index of 0. The lower a home’s HERS Index, the more energy efficient it is in comparison to the HERS Reference Home. Each 1-point decrease in the HERS Index corresponds to a 1% reduction in energy consumption compared to the HERS Reference Home. Thus a home with a HERS Index of 85 is 15% more energy efficient than the HERS Reference Home and a home with a HERS Index of 80 is 20% more energy efficient. HERS Score HERS Index Reference Home Score Reference Home is assigned a HERS Score of 80 Reference Home is assigned a HERS Index of 100, while a net zero energy home is assigned a HERS Index of 0 Reference Home Basis 1993 Model Energy Code (MEC) 2006 International Energy Conservation Code (IECC) Scale Each 5% increase in energy efficiency corresponds to a 1-point increase in HERS Score Each 1% increase in energy efficiency corresponds to a 1-point decrease in HERS Index Energy Use Considered Heating, cooling, and water heating Heating, cooling, water heating, lighting, appliances, and onsite power generation* ENERGY STAR Requirement HERS Score 86 HERS Index of 85 in climate zones 1–5 HERS Index of 80 in climate zones 6–8 Status Phasing out Approved by the RESNET Board of Directors. To be implemented as of July 1, 2006.