If you're making your home more energy efficient, you could qualify for valuable federal tax credits. Here's a quick guide to help you understand what’s available and how to take advantage of it.
What Is Residential Energy?
Residential energy refers to the energy used in homes for heating, cooling, lighting, and powering appliances. Improving the efficiency of your home’s energy use can reduce utility bills and may qualify you for federal tax credits.
What Are Residential Energy Credits?
Residential energy credits are federal tax incentives designed to encourage homeowners and renters to invest in energy-saving improvements. These credits are divided into two parts:
- Residential Clean Energy Credit
- Energy Efficient Home Improvement Credit
Residential Clean Energy Credit (Part I)
The Residential Clean Energy Credit allows you to claim 30% of the cost of qualified clean energy systems installed in your main home.
Eligible systems include:
- Solar electric (photovoltaic) systems
- Solar water heaters
- Small wind turbines
- Geothermal heat pumps
- Biomass fuel systems
Labor costs for onsite preparation, assembly, installation, and wiring or piping to connect the system to your home are also included.
Eligibility Requirements
To qualify:
- The home must be located in the U.S.
- It must be your main home (where you live most of the year).
- You can own or rent the home.
- You must reduce the basis of your home by the amount of any credit received.
What Is the Energy Efficient Home Improvement Credit? (Part II)
This credit covers 30% of the cost of certain energy-saving upgrades made in 2024, including:
Home Improvements:
- Insulation
- Energy-efficient windows, doors, and skylights
- Special roofing that reduces heat loss/gain
Energy Equipment:
- Heat pumps and heat pump water heaters
- Central air conditioners
- High-efficiency furnaces, boilers, and water heaters
- Advanced air-circulating fans
Credit Limits
- $250 per exterior door ($500 total)
- $600 for windows/skylights
- $600 for energy property items
- $150 for home energy audits
- No specific limit for insulation and air sealing (subject to $1,200 annual cap)
You may also claim up to $2,000 annually for:
- Qualified heat pumps
- Heat pump water heaters
- Biomass stoves or boilers
This is in addition to the $1,200 limit, for a potential total credit of $3,200 per year.
Program Entry
To claim a residential energy credit, please follow the steps below.
- Federal
- Deductions (select my forms)
- Credits
- Residential Energy Credits