You can take a tax credit equal to 30% of qualified expenses. The maximum credit each year for qualified energy efficiency improvements, residential energy property expenses and home energy audits is $1,200. In addition, a $2,000 maximum credit per year can be claimed for qualified heat pumps and biomass stoves or boilers. Improvements must be new systems and materials (not used).
Qualified Energy Efficiency Improvements. To qualify, these improvements must have an expected lifespan of at least five years. Qualified improvements include new:
• Exterior doors (limited to $250 per door and $500 total).
• Exterior windows and skylights (limited to $600 total).
• Insulation and air sealing materials or systems designed to reduce heat loss or gain.
Residential Energy Property. This property qualifies for a credit up to $600 per item. Costs may include labor for installation. Qualified property includes new central air conditioners; natural gas, propane, or oil water heaters; natural gas, propane, or oil furnaces; and hot water boilers. Oil furnaces or hot water boilers can also qualify through other efficiency criteria.
Home Energy Audits. A home energy audit for the taxpayer’s principal residence qualifies for a credit up to $150.
Heat Pumps and Biomass Stoves and Boilers. New electric or natural gas heat pumps, electric or natural gas heat pump water heaters and biomass stoves and boilers with a thermal efficiency rating of at least 75% qualify for a credit of up to $2,000 per year. The cost of labor for installation is included.
Residential Clean Energy Property
The Residential Clean Energy Credit equals 30% of the costs of new clean energy property installed anytime from 2022 through 2034. The credit is nonrefundable, but any unused credit can be carried forward. Solar electric panels, solar water heaters that are certified by the Solar Rating Certification Corporation or a comparable entity endorsed by the state, wind turbines, geothermal heat pumps that meet Energy Star requirements in effect at the time of purchase, fuel cells, and battery storage technology with a capacity of at least 3 kilowatt hours qualify for a credit.
If you’ve made home improvements this year or plan to, don’t leave money on the table. We are here to help if you have any questions about whether your home improvements can qualify for a tax credit.