a tankless water heater by Navien
Photo: Courtesy of Navien
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4. Water Heaters

You'll pay: Qualified models start about $2,000.

You'll save: Up to 50 percent on water heating costs.

Why do it now? The more people you have living at home, the more an efficient water heater will save you dough. Qualified models use about only half the energy as nonqualified models, so you'll start seeing the difference right away. And, in this case, the credit covers installation costs. If your heater is more than 10 years old, it might be time to replace it; rust or corrosion on the exterior can be clues to its condition.

What to look for: Tankless models heat water only as you need it, making them more efficient than traditional ones. GE Navien, and Rheem are introducing tank-style heaters that supplement electric or gas heating with an air-source heat pump; both companies say their devices cut water heating costs by up to 50 percent.

Bottom line: By and large, qualified heaters are pricier than standard models, but the credit helps defray that cost. Just don't waste money on a bigger one than you need. "If you've got a small electric water heater in good condition and you live alone, it might not be worth it to upgrade now," says Scheckel.
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