You may qualify to take the credit if you made qualified energy saving improvements to the home during the tax year. The home can be owned or rented, but must be considered your main home during the tax year you wish to claim the credit for. Your main home is generally where you live majority of the time throughout the taxable year. The home must be located in the US. You must reduce the basis of your home by the amount of any credit allowed. The credit consists of two parts, the Residential Clean Energy Credit and the Energy Efficient Home Improvement Credit.
Residential Clean Energy Credit (Part I)
You may be able to take a credit of 30% of your costs of qualified solar electric property, solar water heating property, small wind energy property, geothermal heat pump property, and biomass fuel property.
- Include labor costs allocable to the onsite preparation, assembly, or original installation of the residential energy efficient property and for piping or wiring to connect such property to the home.
Energy Efficient Home Improvement Credit (Part II)
You may be able to take a credit equal to the sum of:
- 30% of the amount paid or incurred for qualified energy efficiency improvements installed during 2024, and
- Any residential energy property costs paid or incurred in 2024.
What is considered a qualified energy efficient improvement?
Qualified energy efficient improvements include:
- Insulation designed to reduce heat loss or gain
- Exterior Windows and Skylights
- Exterior Doors
- Metal Roofing with pigmented coating; or asphalt roof specifically designed to reduce your home's heat loss or gain
- Qualified energy property:
- Certain electric heat pump water heaters; electric heat pumps; central air conditioners; and natural gas, propane, or oil water heaters.
- Qualified natural gas, propane, or oil furnaces and qualified natural gas, propane, or oil hot water boilers.
- Advanced main air circulating fans used in natural gas, propane, or oil furnaces.
This credit is limited as follows.
There is no longer a $500 lifetime credit limit, instead for qualified property placed in service on or after January 1, 2023 and before January 1, 2033, you can now claim up to $1,200 annually until 2033 when you make eligible improvements. The limits are as follows:
- $250 per exterior door and $500 total
- $600 for exterior windows and skylights
- $600 for energy property items (i.e., central air conditioners, natural gas, propane, or oil furnaces, hot water boilers, etc.,)
- $150 home energy audits
- There is no specific limit for insulation and air sealing materials/systems other than the maximum credit of $1,200
You can also claim up to a $2,000 credit annually for qualified heat pumps, heat pump water heaters and biomass stoves or boilers.
This $2,000 limit is in addition to the $1,200 limit for other items, for a potential credit of $3,200.