Home energy-efficiency upgrades come with a lot of benefits. They can lower your energy bills, make your home more comfortable and reduce your environmental footprint. The bad news is that home energy upgrades can be costly. The good news is that a variety of tax credits are available to help reduce those costs, making home energy improvement more affordable.
What tax credits are available?
Federal tax credits of up to 30% of the cost of qualifying home improvements are available for qualifying projects. Individual projects are subject to maximum amounts, which are detailed below.
- Air-source and geothermal heat pump HVAC systems ($2,000 maximum)
- Heat pump water heaters ($2,000 maximum)
- Insulation and air sealing ($1,200 maximum). Improvements include insulation, weatherstripping, caulk and expandable foam. Materials or systems must meet International Energy Conservation Code requirements.
- Windows and skylights ($600 maximum). Windows and skylights must make the ENERGY STAR® Most Efficient list, which features the very best products for energy savings and environmental protection.
- Exterior doors (maximum $250 per door, $500 total). Eligible doors must be ENERGY STAR-certified.
- Home energy audit ($150 maximum). The audit must include a written report and be conducted by a certified home energy auditor.
Tax credits for up to 30% of project costs are also available for clean energy upgrades, including solar panels, solar water heaters, small wind turbines, fuel cells and geothermal systems. Battery storage technologies are also eligible.
Only improvements made to existing homes that are the taxpayer's principal residence can qualify for these credits.
How do I claim the credits?
You can claim credits when you file your tax return. A credit is an amount you subtract from the tax you owe, which can lower your tax payment or increase your refund.
If you completed qualifying home energy upgrades last year, you can claim them on this year's return. Any upgrades you make this year can be claimed next year. These credits are available for projects installed between January 1, 2023, and December 31, 2032.
Gather all relevant documents associated with your energy upgrades. To claim credits, answer appropriate questions in your tax filing software. If you file a paper return, you will have to complete a form and attach it.
For more information, see Tax Credits and Deductions from the U.S. Internal Revenue Service or contact a qualified tax professional. State and local financial incentives may also be available in your area for energy-efficiency upgrades.
