Are you Eligible for Home Energy Tax Credits in 2023?

Posted by Nathan Isabelle on Aug 28, 2023 11:05:18 AM
Nathan Isabelle
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Did you know that home energy tax credit amounts were increased in 2023? Taxpayers who make home energy improvements this year may be able to take advantage of these credits for qualifying expenses, which were also expanded.

There are two energy credits available – the Energy Efficient Home Improvement Credit, and the Residential Energy Clean Property Credit.

Both credits require a taxpayer to claim them in the year that qualifying improvements were made to their primary home – the home in which they spend most of their time – which must be located in the United States.

Taxpayers may also be able to claim credits for certain improvements to a secondary home if that home isn’t used as a rental property. Renters can also qualify for tax credits if they purchase energy efficient appliances and other products for their rental home.

Energy Efficient Home Improvement Credit

Taxpayers can claim a credit of $1,200 - $2,000 per year if they make home improvements that meet energy efficiency requirements. Although the credit has no lifetime dollar limit, it can’t be carried over from one year to another. It is not refundable.

Qualifying home improvements include:

  • Exterior doors
  • Windows
  • Skylights
  • Insulation
  • Central air conditioning
  • Heat pumps and water heaters
  • Biomass stoves and boilers
  • Home energy audits

Residential Clean Energy Credit

Taxpayers who invest in renewable energy for their primary home can claim a credit of 30% (for tax years 2022 and 2023) of the total cost of the investment. There is generally no annual maximum or lifetime dollar amount limit on the credit, except for fuel cell improvements.

Qualified improvements include:

  • Solar, wind and geothermal power generation
  • Solar water heaters
  • Fuel cells
  • Battery storage

If you have questions about home energy improvement credits, leave a comment below, or feel free to contact me directly.

Topics: Regulatory Updates, Tax