If you make qualified energy-efficient improvements to your home after Jan. 1, 2023, you may qualify for a tax credit up to $3,200. You can claim the credit for improvements made through 2032.
Beginning Jan. 1, 2023, the credit equals 30% of certain qualified expenses, including:
- Qualified energy efficiency improvements installed during the year
- Residential energy property expenses
- Home energy audits
There are limits on the allowable annual credit and on the amount of credit for certain types of qualified expenses. The credit is allowed for qualifying property placed in service on or after Jan. 1, 2023, and before Jan. 1, 2033.
The maximum credit you can claim each year is:
- $1,200 for energy property costs and certain energy efficient home improvements, with limits on doors ($250 per door and $500 total), windows ($600) and home energy audits ($150)
- $2,000 per year for qualified heat pumps, biomass stoves or biomass boilers.
Items of note:
1. The credit has no lifetime dollar limit. You can claim the maximum annual credit every year that you make eligible improvements until 2033.
2. The credit is nonrefundable, so you can't get back more on the credit than you owe in taxes.
3. You can't apply any excess credit to future tax years.
4. To qualify, home improvements must meet energy efficiency standards. They must be new systems and materials, not used.
To claim the credit, you'll need to file Form 5695, Residential Energy Credits Part II, with your tax return. You must claim the credit for the tax year when the property is installed, not merely purchased.
Ruth C-L, CPA, Attorney
