Cash for a Clunker Appliance

Similar to last year’s cash for clunker program, the American Recovery and Reinvestment Act of 2009 has allocated $300 million for rebates to eligible residential consumers when they recycle their used appliances and purchase new energy-efficient ones (otherwise known as ENERGY STAR appliances).  Each state is in charge of designing  and implementing its own unique Appliance Rebate Program, and the Department of Energy (DOE) has already approved all of them.  A handful of states (Iowa, Kansas, Minnesota, Rhode Island) have started their programs, but most will launch theirs later this month.  Click here for details of the program available in your state.

Although this will vary state by state, most rebate amounts will range from $50 to $500 for the following list of DOE recommended appliances:

• Boilers
• Central air conditioners
• Clothes washers
• Dishwashers
• Freezers
• Furnaces (oil and gas)
• Heat pumps (air source and geothermal)
• Refrigerators
• Room air conditioners
• Water heaters

But note that states have the choice of choosing a subset of appliances from the above list.  Consumers may also be eligible for more than one rebate if the state allows it.  States have until February 2012 to spend the money they received from the federal government, but if the cash for clunkers program is any indication, the money will run out quick.

Most importantly, consumers can combine the rebate with the federal tax credit for energy efficiency.  Under this tax credit, energy-efficient products are eligible for tax credits at 30% of the cost, up to a total credit of $1,500.  However, the $1,500 is the maximum for the combined 2009-2010 tax years, so if you have already received the maximum for the 2009 tax year, you won’t be eligible for a tax credit on the rebate purchases.  Click here for more information on what products qualify for the tax credit. 

Finally, if you decide to purchase an appliance, check to see if you can collect extra points or cashback with your credit cards.  For example, the Discover Card is offering a 5% cashback this quarter for purchases at home improvement and department stores.  The 5% cashback is subject to a $400 cap, but that would still translate to $20 in cashback on top of your rebate and tax credit.

No matter how you combine these incentives, at the end of the month, you will always be the winner as you start saving money on your energy bill.