The federal government offers an income tax credit equal to 30 percent of the cost tankless water heaters with an Energy Factor of 0.82 or greater. The maximum tax credit is $1,500 for 2010, but if you don’t use the entire $1,500 for your water heater, you can combine the rebate for other incentives such as insulation, air sealing, HVAC equipment and more.

If you’re not sure what other energy efficiency upgrades would make sense in your home, check out our free online energy audit estimator to get a list of recommended upgrades and an idea of how much you can save. You may find that a lot of the recommended upgrades not only qualify for the tax credit, but also for energy rebates from local utility companies and NYSERDA.