Energy tax credits have been around for a while, but thanks to the Inflation Reduction Act, you can now save even more.
The new Energy Efficient Home Improvement Credit is available to homeowners in the United States as an incentive to encourage the use of renewable energy sources.
Lear about other energy-efficient updates in our article about energy saving roofing.
This credit can help offset the cost of installing clean energy systems in homes and businesses.
Energy-Efficient Home Improvement Credit Breakdown
The Inflation Reduction Act increased the tax credit percentage for installing some energy-efficient equipment. For example, you can now receive 30 percent of the cost of installing insulation, energy-efficient windows and doors and more.
New energy tax credits cover part of the cost of home battery storage and electrical panel upgrades. Also new in 2023 is a tax credit for having a home energy audit.
Review the table below or go to whitehouse.gov/cleanenergy to see everything included in the new energy tax credits.
Products Eligible for Inflation Reduction Act Tax Credits
‘Clean’ electricity products
- Solar panels for electricity from a provider in your area.
- Home backup power battery storage with a capacity of 3 kWh or greater.
Heating, cooling, and water heating
- Electric or natural gas heat pumps; electric or natural gas heat pump water heaters; central air conditioners; natural gas or propane or oil water heaters; natural gas or propane or oil furnaces or hot water boilers that meet or exceed the specific efficiency tiers established by the Consortium for Energy Efficiency.
- Solar water heating products certified for performance by the Solar Rating Certification Corporation or a comparable entity endorsed by the state government in which the product is installed.
Other energy efficiency upgrades
- Oil furnaces or hot water boilers if they meet or exceed 2021 Energy Star efficiency criteria and are rated by the manufacturer for use with fuel blends at least 20 percent of the volume of which consists of an eligible fuel.
- Panelboards, sub-panelboards, branch circuits, or feeders that are installed according to the National Electrical Code and have a load capacity of 200 amps or more.
- Insulation materials and systems that meet International Energy Conservation Code standards.
- Exterior windows that meet Energy Star’s Most Efficient requirements.
How to Claim Inflation Reduction Act Tax Credits
Homeowners who purchase energy and other efficient appliances and products can take advantage of these clean energy tax credits.
To claim them, homeowners must file their taxes using IRS Form 5695 and provide proof of the purchase, like invoices and receipts.
You can claim the same or varying credits year after year with new products purchased. However, some credits have an annual limit, so check the table above to make sure you don’t go over.
Additionally, these credits may have limits and expiration dates, so it’s best to check with the relevant tax authorities for the most updated information.
For more information, read the Frequently asked questions about energy-efficient home improvements and residential clean energy property credits.