Tax Deduction for Interest on Loans for Energy Efficiency

August 03, 2007


This personal tax deduction allows taxpayers to deduct the interest paid on loans used to purchase energy efficient products or equipment for a residence in California. The deduction is for loans from a publicly-owned utility company for the purchase of energy-efficient heating, ventilation, air-conditioning, lighting, solar, advanced metering of energy usage, windows, insulation, zone heating products, and weatherization systems. Customers of publicly-owned utility companies that do not offer customer financing may be able to deduct the interest from a home equity or home improvement loan used to purchase energy efficient products and equipment. Publicly-owned utility companies must issue a federal income tax Form 1098, or similar form, to notify their customers of their eligibility for this deduction. Furthermore, this deduction may not be taken if a tax credit is taken for the purchase of the energy efficient equipment. Contact the IRS for more information.

Program Overview

Implementing Sector: State
Category: Financial Incentive
State: California
Incentive Type: Personal Tax Deduction
Web Site:
Administrator: California Franchise Tax Board
Start Date: 10/1/01
Eligible Renewable/Other Technologies:
  • Solar Water Heat
  • Solar Space Heat
  • Solar Photovoltaics
  • Daylighting
  • Lighting
  • Chillers
  • Furnaces
  • Boilers
  • Heat pumps
  • Air conditioners
  • Caulking/Weather-stripping
  • Duct/Air sealing
  • Building Insulation
  • Windows
  • Custom/Others pending approval
  • Other EE
Incentive Amount: 100% of interest from loan


Name: CA Revenue and Taxation Code § 17208.1
Date Enacted: 10/1/01
Effective Date: 10/1/01


Name: Tax Specialist - FTB
Organization: California Franchise Tax Board
Address: PO Box 942840
Sacramento CA 94240-0040
Phone: (800) 852-5711
Name: Information Specialist - IRS
Organization: Internal Revenue Service
Address: 1111 Constitution Avenue, N.W.
Washington DC 20224
Phone: (800) 829-1040

This information is sourced from DSIRE; the most comprehensive source of information on incentives and policies that support renewables and energy efficiency in the United States. Established in 1995, DSIRE is operated by the N.C. Clean Energy Technology Center at N.C. State University.