Section 25C of the U.S. tax code was established in 2009, ran through 2010 and provided up to $1,500 tax credits for the installation of energy-efficient windows. It was extended through 2011 at $500 and expired at the end of the year. In late November 2012 as this was written, Congress had not addressed 25C nor the more than 200 other tax breaks on the table. Extending 25C in its current form will not do much good, AAMA’s Walker says, as evidence has proven that it’s not an incentive to persuade homeowners to buy windows. “The amounts that were in effect for 2010 for example, at $1,500, had many manufacturers seeing an uptick in business that year,” he says.
WDMA also is in favor of establishing an effective incentive for consumers to buy and install efficient windows. “The estimate from the EPA is one billion single-glaze windows are in the market,” Lowinski says. “Using tools like 25C to put money into the hands of people who need to replace those inefficient windows that are wasting energy is a good thing. It will lower fuel bills and increase the efficiency of the existing housing stock.”
The Senate finance committee in August 2012 passed an extension of 25C and several other soon-to-expire deductions. “The extension would extend the 2011 level, which is 10 percent of the cost up to $200 for windows and $500 for doors, through 2013,” explains Ben Gann, director, legislative affairs and grassroots activities, WDMA.
“On the House side, we have a standalone piece of legislation called HR-6398, or the Home Energy Savings Act, that’s structurally different than what the Senate proposed,” Gann continues. “This bill would extend the 2011 level through 2013 like the Senate’s. Labor costs would be included for all qualified products, and it makes the credit permanent. It has only been introduced in the House, and in this lame duck Congress it’s one of dozens of other credits that are about to expire.”
WDMA and AAMA would love to see a permanent tax credit established, which would allow remodeling contractors once again to promote the credit to consumers. “The 2009 and 2010 versions were successful because consumers knew there would be a credit thanks to remodelers advertising it so much. Because consumers knew in advance, they were able to decide to get a less-efficient product or spend more money on a better product and get a credit. The reason it was successful is because remodeling businesses were advertising the credit. It’s unclear how much of that will go on as 25C is proposed now, because most remodelers’ marketing decisions for 2013 have been made already, so there might not be money to advertise a credit in 2013.”
Lead paint battle
Another critical political issue affecting the window market is the 2008 Lead Renovation Repair and Painting law, which governs how to work in homes with lead paint, and who can perform the work. The good news, Walker says, is the U.S. EPA has delayed expanding the rule to the commercial sector. “AAMA has a substantial commercial window and door manufacturing segment that is relieved to hear that. The bad news is the lack of activity in court and through legislation to restore the opt-out option, because the lame duck Congress [had] to deal with more major issues like the fiscal cliff. We don’t anticipate anything significant happening to the lead in remodeling law for six months,” Walker says.
Legislation exists in both houses of Congress to, among other things, restore the opt-out provision, WDMA’s Gann says. Both bills are roughly the same, and would defund enforcement of the rule if the EPA can’t certify a lead paint test kit that meets the standard for false positives and negatives. “Right now none of the three kits on the market are producing acceptable results. Another part of the legislation addresses certified remodelers, allowing them to recertify by taking an online course and not having to take one in person,” Gann explains. “Also in those bills is a one-time exemption for paperwork violations, so if you make a mistake once you would not be fined.”
The House bill, Gann says, takes a cooperative approach by giving the EPA six months to come up with a process for identifying an acceptable test kit, then a year to identify a test kit. As far as a timeline, the bills are sitting still right now and are expected to be reintroduced at the start of the new Congress.