16     Section 1. Section 606 of the tax law  is  amended  by  adding  a  new

17  subsection  (II)  to read as follows:

18      (II)   Home heating system credit.  (1) Allowance of credit for replace-

19  ment. A taxpayer shall be allowed a credit against: the  tax  imposed  by

20  -this article for costs incurred on or after July first, two thousand six

21  and  before  July  first,   two  thousand  seven  by a taxpayer which are

22  directly associated with the replacement of  an  existing  home  heating

23  system,  in his or her principal residence, if such residence is located

24  in this state, provided such home heating system after such  replacement

25  qualifies for, and is labeled with, an Energy Star label by the manufac-

26  turer,  pursuant  to  an  agreement  among  the manufacturer, the United

27  States environmental protection agency and the United States  department

28  of  energy.  The amount of the credit shall be equal to fifty percent of

29  the cost of such replacement but  such  credit  shall  not  exceed  five

30  hundred dollars.

31     (2) Multiple taxpayers. If the principal residence is shared by two or

32  more taxpayers, the amount of the credit allowable under this subsection

33  for  each  such  eligible  taxpayer  shall  be prorated according to the

34  percentage of the total expenditure for  such  replacement  incurred  by

35  each taxpayer.

36      (3)   Application   of credit.  If the amount of the credit allowed under

37  this subsection for any taxable year shall exceed the taxpayer's tax for

38  such year, the excess shall be treated as an overpayment of  tax  to  be

39  credited  or  refunded  in accordance with the provisions of section six

40  hundred eighty-six of this article, provided, however, that no  interest

41  shall be paid thereon.

42     § 2. This act shall take effect immediately and shall apply to taxable

41  years beginning in  2006 and 2007