As you strive to create a more energy efficient home, be sure to take advantage of the many tax credits and rebates available to you. It feels good to be rewarded and save money for doing your part to better the Earth and lessen your carbon footprint.
One of the biggest ways to get rewarded is through the federal Inflation Reduction Act (IRA). The federal government is directing an unprecedented $369 billion toward energy saving initiatives through tax credits. These initiatives and energy upgrades include (but are not limited to) products such as insulation and air sealing, heat pump water heaters, exterior doors, biomass stoves, and central air conditioners.
The changes realized through these IRA tax credits will have numerous benefits for homeowners including improved home energy efficiency, reduced energy bills, and improved home comfort. With these tax credits, the government will reimburse you for the energy-saving changes you make by either reducing the amount of federal income tax you owe on your tax return or adding it to your income tax refund.
Even more exciting is that these IRA tax credits can be combined with local incentives for even bigger savings! It’s a win-win for you and your wallet.
IRA tax credits include:
- Residential retrofit incentives
- New and retrofit commercial incentives
- New home incentives
- Efficient building envelopes through building codes
Here are some key points from the Act.
Residential Retrofit Incentives
- The Energy Efficient Home Improvement Credit will be equal to 30% of the costs of all eligible home improvements, including insulation and air sealing materials, up to $1,200 (per year).
- Credit available on a yearly basis. Get money back every year until 2032!
- Home energy audits covered up to $150.
- Enhanced credit amount applies from January 1, 2023 to December 31, 2032.
New Home Incentives
- Builder credit of $2,500 for single family homes that meet ENERGY STAR HOME Version 3.2 and meet 2021 IECC prescriptive envelope standards.
- Builder credit of $5,000 for single family homes that meet DOE Zero Energy Ready Home standard.
- Builder credit of $500 per multifamily unit when meeting ENERGY STAR HOME Version3.2, with incentives increasing to $2,500 when meeting prevailing wage requirements.
- Builder credit of $1,000 per multifamily unit when meeting DOE Zero Energy Ready Home standards, and incentives increasing to $5,000 when meeting prevailing wage requirements.
- Enhanced credit amount applies from January 1, 2023 to December 31, 2032.
There are many components to this act and many ways you can save but remember income tax credits are subject to program changes. Our team is happy to answer all your questions. Use this form to contact us and learn how federal tax credits can help with your home improvement project.