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The federal government provides incentives for taxpayers to improve the energy efficiency of their homes in two broad areas. The first area includes improvements that reduce the amount of energy a home consumes, such as insulation, energy-efficient windows and doors, and HVAC (heating, ventilating, air conditioning) systems. The second area includes improvements to the amount of energy a home creates, such as wind turbines and solar energy systems.Federal tax incentives available to homeowners in 2011 include:–A 10 percent tax credit for purchase and installation of certain improvements and appliances, up to $500. Some of the purchases have individual limits as well. Qualifying biomass stoves, air conditioners, heat pumps and water heaters are eligible for $300 tax credits. Insulation, certain roofing materials, and skylights and doors that meet energy-saving requirements are eligible for the 10 percent tax credit up to $500. Windows are capped at $200, and appliances or other energy improvements are eligible for smaller amounts.–A 30 percent tax credit for purchase and installation of certain solar energy systems, wind turbines, and geothermal heat pumps, with no upper limit on the amount of the tax credit. In some cases the credit can be extended to future tax years. Solar water heaters and solar panels generally qualify for this credit. Residential wind turbines are becoming more popular and more affordable, especially because of this tax credit. There is one drawback to energy-producing tax incentives: the credit for installation of the emerging fuel cell technology, which captures energy from micro-turbines and stores it in hydrogen fuel cells, is capped at $500.In addition to federal tax incentives, most states provide tax incentives for energy-saving home improvements as well. North Carolina, for example, offers tax credits of 35 percent of the cost of energy-producing systems. Combined with the federal tax credit, homeowners can save 65 percent of the total cost.