Capitol Connection: What you need to know about Connecticut’s Energy Star Tax Exemption Repeal

December 24, 2015

In the recent state budget adjustment made to close a gaping shortfall, the state’s tax exemption on Energy Star weatherization products was also repealed. Beginning on January 1, 2016 consumers will no longer be able to avoid paying the sales tax when purchasing Energy Star home weatherization products, which includes programmable thermostats, water heaters, boilers and furnaces.

Recently I’ve received many questions about this change from constituents, including both retailers and customers. If I purchase something before year end, but I don’t pay in full, am I still eligible for the exemption? What if the product doesn’t ship before the end of year? What’s the drop dead cut off date?

Thanks to recent clarification from the state Department of Revenue Services, here’s what you need to know:

1. Any order placed on or prior to December 31st with a deposit and which is in stock will still qualify for the tax exemption, regardless of delivery or installation date.
2. To qualify as ‘in stock’, a retailer must pull a product from stock or inventory or indicate in inventory control that an item is purchased.
3. If a product is not in stock prior to the end of the year or if it needs to be manufactured, it will not be eligible for the exemption.
4. Any item that is paid for in full prior to January 1, whether or not items are in stock, the sales tax exemption still applies.

When this tax exemption was first put into place in 2005, and later updated in 2007 to include compact fluorescent lightbulbs, it was meant to be an incentive for individuals to purchase Energy Star and weatherization products. It could only be applied to in-store purchases, not mail-orders, telephone or online sales.

Given the prominence of Energy Star products on the market today, the hope is that eliminating this exemption won’t deter customers from investing in efficient products. Connecticut residents know the importance of making efficient choices, and the impact of these choices on our environment and our wallets over time.

A full list of all residential weatherization products eligible for the in-store tax exemption before the end of the year is included below. To qualify as a residential weatherization product, the item must be designed and marketed for residential use and not for commercial use.

  • Programmable thermostats;
  • Window film;
  • Caulking of a type marketed for preventing drafts, such as window and door caulking;
  • Window and door weather strips, including door sweeps;
  • Insulation, for example attic and wall insulation, spray foam insulation, water pipe insulation, heating duct insulation, and switch and outlet insulators;
  • Water heater blankets;
  • Water heaters;
  • Boilers that are not less than 84% efficient based on the annual fuel utilization efficiency (AFUE) rating;
  • Natural gas furnaces that meet the federal Energy Star standard;
  • Propane furnaces that meet the federal Energy Star standard;
  • Windows that meet the federal Energy Star standard (storm windows do not have an Energy Star standard and are not included in this exemption);
  • Doors that meet the federal Energy Star standard (storm doors do not have an Energy Star standard and are not included in this exemption);
  • Oil furnaces that are not less than 84% efficient based on the AFUE rating; and
  • Ground-source heat pumps that meet the minimum federal energy efficiency rating.

Have more questions about this exemption? Click here to view Connecticut’s Tax Expenditure report. Page 40 includes more details: