Does a tankless water heater qualify for a residential energy credit?

[Cynthiad66]

Yes.  he credit amount for Gas, Oil, Propane Water Heaters, including tankless units, is $300. That means if you installed a qualifying tankless water heater last year, you could get the credit on the return

[Cynthiad66]

Yes.  The credit amount for Gas, Oil, Propane Water Heaters, including tankless units, is $300. That means if you installed a qualifying tankless water heater last year, you could get the credit on the return

he credit amount for Gas, Oil, Propane Water Heaters, including tankless units, is $300. That means if you installed a qualifying tankless water heater last year, you could get the credit on the return

[edited 2/12/21 | 11:43 pst]

[wtn1961W89]

Exactly how do I get the $300 tankless water heater credit using Turbo Tax?

[ReneeM7122]

Yes, a tankless water heater qualifies for up to $300 as a residential energy credit in 2020.  Use Form 5695 to claim the Residential Energy Credit . 

Access the form from the Credits and Deductions section in Turbo Tax.  Type Form 5695 in the search box, and then click Jump to Form 5695.

Here is a TurboTax article about energy credits.

@wtn1961W89

[JLobdell]

If I purchase an electric tankless hot water heater in 2022, do I get a federal and or state tax credit when I file my taxes?

[Opus 17]

Possibly, but you should wait until 2023.

Firstly, "tankless" by itself is not enough to qualify.  The appliance must "meet or exceed the highest efficiency tier (not including any advanced tier) established by the Consortium for Energy Efficiency which is in effect as of the beginning of the calendar year in which the property is placed in service."  So it's not tankless that counts, but its overall efficiency.  You will need to check with the manufacturer. 

Second, the credit is claimed when the property is installed, not when it is ordered and paid for.  If it is installed in 2022, the credit is 10% of the cost, including installation, up to a maximum of $300.  There is also a $500 lifetime cap on all improvements under this section (doors, windows, furnace, etc) so you may have already maxed out the credit.

The law was changed starting January, 2023.  If you install the property on or after 1/1/23, the credit is 30% of the cost, up to a maximum of $600, and the lifetime cap for energy efficient improvements is removed.

https://ttlc.intuit.com/community/tax-law-changes/discussion/faq-revisions-to-section-25c-energy-eff...

[jtb5]

How do I find out if my Rinnai  tankless model qualifies? And do I include the cost for the tank and installation or just the tank?  

[TomK2023]

Maybe.  Check if your tankless water heater is listed on the Rinnai document links below.

Starting January, 2023.  If you install a qualifying tankless water heater on or after 1/1/23, the credit is 30% of the cost (including installation), up to a maximum of $600.  The lifetime cap for energy efficient improvements has been removed.

Rinnai Federal Tax Credits

RINNAI MANUFACTURER’S CERTIFICATION STATEMENT FOR FEDERAL TAX CREDIT

[jtb5]

How do I know If my tankless water heater installed in my home in 2023, replaced two tank water heaters that flooded my basement, is eligible for energy credit? 

TT says :

Enter the amounts you paid for natural gas, propane or oil water heaters that achieve the highest efficiency tier established by the CEE that is in effect as of the calendar year in which the property is placed in service.  

Can't just say: if you installed a water heater tank or tankless.  Then what is the model # to find out if it qualifies.

[DaveF1006]

It's covered. You can still claim your water heater in this section even if it doesn't specify tankless water heater if that is your question.

[AmeliesUncle]

I suspect that tankless water heaters don't qualify, but I'm not certain of that.  See the link below to find the qualifying items.

https://www.energystar.gov/about/federal-tax-credits/water-heaters-natural-gas-oil-propane-tax-credi...