To amend the Internal Revenue Code of 1986 to provide a refundable credit against income tax to assist individuals with high residential energy costs.

Summary: Home Energy Affordability Tax Relief Act of 2008 or the HEATR Act of 2008 - Amends the Internal Revenue Code to allow individual taxpayers an income-based refundable tax credit for residential energy costs. Limits such credit to the lesser of 33% of such costs or $500.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Home Energy Affordability Tax Relief 
Act of 2008'' or the ``HEATR Act of 2008''.

SEC. 2. REFUNDABLE CREDIT FOR RESIDENTIAL ENERGY COSTS.

    (a) In General.--Subchapter B of chapter 65 of the Internal Revenue 
Code of 1986 (relating to rules of special application) is amended by 
adding at the end the following new section:

``SEC. 6431. REFUNDABLE CREDIT FOR RESIDENTIAL ENERGY COSTS.

    ``(a) General Rule.--In the case of an individual, there shall be 
allowed as a credit against the tax imposed by this subtitle for the 
taxable year an amount equal to the lesser of--
            ``(1) 33 percent of the amount of the taxpayer's 
        residential energy costs for such taxable year, or
            ``(2) $500.
    ``(b) Income Limitation.--
            ``(1) In general.--The amount allowable as a credit under 
        subsection (a) for any taxable year shall be reduced (but not 
        below zero) by an amount which bears the same ratio to the 
        amount so allowable (determined without regard to this 
        paragraph) as--
                    ``(A) the amount (if any) by which the taxpayer's 
                adjusted gross income exceeds $50,000 (twice such 
                amount in the case of a joint return), bears to
                    ``(B) $10,000.
            ``(2) Determination of adjusted gross income.--For purposes 
        of paragraph (1), adjusted gross income shall be determined 
        without regard to sections 911, 931, and 933.
    ``(c) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Residential energy costs.--The term `residential 
        energy costs' means the amount paid or incurred by the taxpayer 
        during the taxable year--
                    ``(A) to any utility for electricity or natural gas 
                used in the principal residence of the taxpayer during 
                the heating season, and
                    ``(B) for any qualified fuel for use in the 
                principal residence of the taxpayer but only if such 
                fuel is the primary fuel for heating such residence.
            ``(2) Principal residence.--
                    ``(A) In general.--The term `principal residence' 
                has the meaning given to such term by section 121; 
                except that no ownership requirement shall be imposed.
                    ``(B) Special rules.--Such term shall not include--
                            ``(i) any residence located outside the 
                        United States, and
                            ``(ii) any residence not used as the 
                        taxpayer's principal place of abode throughout 
                        the heating season.
            ``(3) Heating season.--The term `heating season' means 
        October, November, December, January, February, and March.
            ``(4) Qualified fuel.--The term `qualified fuel' includes 
        propane, heating oil, kerosene, wood, and wood pellets.
    ``(d) Other Special Rules.--
            ``(1) Individuals paying on level payment basis.--Amounts 
        paid for natural gas under a level payment plan for any period 
        shall be treated as paid for natural gas used during the 
        portion (if any) of the heating season during such period to 
        the extent of the amount charged for natural gas used during 
        such portion of the heating season. A similar rule shall apply 
        to electricity and any qualified fuel.
            ``(2) Homeowners associations, etc.--The application of 
        this section to homeowners associations (as defined in section 
        528(c)(1)) or members of such associations, and tenant-
        stockholders in cooperative housing corporations (as defined in 
        section 216), shall be allowed by allocation, apportionment, or 
        otherwise, to the individuals paying, directly or indirectly, 
        for the residential energy cost so incurred.
            ``(3) Dollar amount in case of joint occupancy.--In the 
        case of a dwelling unit which is the principal residence by 2 
        or more individuals, the dollar limitation under subsection 
        (a)(2) shall be allocated among such individuals under 
        regulations prescribed by the Secretary.
            ``(4) Treatment as refundable credit.--For purposes of this 
        title, the credit allowed by this section shall be treated as a 
        credit allowed under subpart C of part IV of subchapter A of 
        chapter 1 (relating to refundable credits).
    ``(e) Inflation Adjustment.--
            ``(1) In general.--In the case of any taxable year 
        beginning in 2009, each of the dollar amounts contained in 
        subsections (a)(2) and (b)(1)(A) shall be increased by an 
        amount equal to--
                    ``(A) such dollar amount, multiplied by
                    ``(B) in the case of--
                            ``(i) the dollar amount contained in 
                        subsection (a)(2), the fuel price inflation 
                        adjustment for 2009, and
                            ``(ii) the dollar amount contained in 
                        subsection (b)(1)(A), the cost-of-living 
                        adjustment determined under section 1(f)(3) for 
                        2009 by substituting `calendar year 2007' for 
                        `calendar year 1992' in subparagraph (B) 
                        thereof.
            ``(2) Fuel price inflation adjustment.--For purposes of 
        paragraph (1)(B)(i)--
                    ``(A) In general.--The fuel price inflation 
                adjustment for 2009 is the percentage (if any) by 
                which--
                            ``(i) the CPI fuel component for October of 
                        2008, exceeds
                            ``(ii) the CPI fuel component for October 
                        of 2007.
                    ``(B) CPI fuel component.--The term `CPI fuel 
                component' means the fuel component of the Consumer 
                Price Index for All Urban Consumers published by the 
                Department of Labor.
            ``(3) Rounding.--
                    ``(A) Credit amount.--
                            ``(i) Credit amount.--If the dollar amount 
                        in subsection (a)(2) (after being increased 
                        under paragraph (1)), is not a multiple of $10, 
                        such dollar amount shall be rounded to the 
                        nearest multiple of $10.
                            ``(ii) Income threshold.--If the dollar 
                        amount in subsection (b)(1)(A) (after being 
                        increased under paragraph (1)), is not a 
                        multiple of $50, such dollar amount shall be 
                        rounded to the next lowest multiple of $50.
    ``(f) Application of Section.--This section shall apply to 
residential energy costs paid or incurred after the date of the 
enactment of this section, in taxable years ending after such date, and 
before January 1, 2010.''.
    (b) Conforming Amendments.--
            (1) Paragraph (2) of section 1324(b) of title 31, United 
        States Code, is amended by striking ``or 6428 or'' and 
        inserting ``, 6428, 6431, or''.
            (2) The table of sections for subchapter B of chapter 65 of 
        such Code is amended by adding at the end the following new 
        item:

``Sec. 6431. Refundable credit for residential energy costs.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after the date of the enactment of this 
Act.