Lara a few months ago John Markman wrote a piece on MSN's Money Central which led people to believe that these were not tax credits but tax cuts. Not so says the IRS and the Bush Energy Bill. You really need to do a little homework here beginning with Energystar.gov, entering your zip and finding rebates and incentives in your area. Many of the local incentives don not make their mark on the website, in this case go to your local utilites and check for rebates and incentives. I found one on Keyspan Gas for $300 for my new Bosch Wall mounted tankless hot water heater. Combine that with the tax break, and I'm only out the flue and gas hookup. Windows are $10/ea, not certain about doors. Solar PV and Hybrids are currently $4000.

The Tax credit is 30% up to a maximum of $1500 for new or upgraded H/C equipment. The real question is this if it will read for each piece of equipment or a total for the tax year regardless if you have one or both pieces of equipment replaced/upgraded ? Its in the Stimulas bill somewhere around page 435 - 600, the furnace needs to be a minimum of 95% or 96% AFUE and AC/HP need to have a minimum Seer of 14 and a eer of 141/2 or 15 with a HSPF of 8.5 or greater which basically means your going to have to have the highest effcient equipment installed to meet the quailifcation.

poorowner the "circulating fan" they speak of is a high efficient or variable speed fan/blower not a whole house fan. I suggest you check the attached link. good luck! Here is a link that might be useful: Energy Star Gov Site

It varies of course depending on local gas and electric rates but generally speaking gas water heaters are quite a bit cheaper to operate than electric. There's another issue though. Electric water heaters for safety reasons should be kept at 140° while a gas heater can be kept at 120° without risking increased Legionella risk. The reason is the flame is on the bottom of the tank where heating elements are higher up in electric heaters. In order to heat all the water in an electric heater, it has to be higher by design. Heat rises through the gas tank though. Hope that's not too confusing. Now, it should also be pointed out that there's other variables in use. And cost savings is relative. Some people don't care about spending an extra $10-20 a month in the grand scheme of things. But overall, if you have a choice, go with natural gas first, propane second as preferable choices over electric water heaters.