Home Energy Tax Credits

Tax season is going to be here before you know it. Therefore, now is the time to ensure that you have completed all of the energy-efficient upgrades to your home.

Having an energy-efficient home will save money on your bills and pay less money in taxes. Learn how you claim home energy tax credits if you qualify.

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Residential Clean Energy Tax Credit

home energy tax credits

The Residential Clean Energy Tax Credit is an energy tax credit that many homeowners can claim on their tax returns.

You can get a 30% credit for your energy-efficient improvements. Things that fall under this category include:

  • Water heaters
  • Electric heat pumps
  • Central air conditioners
  • Natural gas, propane, or oil water heaters
  • Qualified oil furnaces
  • Qualified oil hot water boilers
  • Some air-circulating fans
  • Insulation that reduces heat loss or gains
  • Exterior windows, skylights, or doors
  • Storm windows and doors
  • Solar panels
  • Metal and asphalt roofs that reduce heat loss or gain

Residential Energy Efficient Property Credit

This energy tax credit will allow you to have a 30% credit for the alternative energy equipment that you have installed. Some of the things included are as follows:

  • Solar electric property
  • Solar water heating property
  • Fuel cell property
  • Small wind energy property
  • Geothermal heat pump property

Annual Limits on Energy Efficient Home Improvement Tax Credits

There are annual aggregate limits in addition to limits on the amount of credit you may claim for any specific equipment installation or home improvement.

The total annual limit for an efficiency tax credit is $3,200. This equates to a total limit of $1,200 for any specific home upgrades (windows/doors/skylights, insulation, electrical) as well as furnaces, boilers, and central air conditioners.

An annual cumulative limit of $2,000 applies to any combination of heat pumps, heat pump water heaters, and biomass stoves/boilers. (Please keep in mind that ENERGY STAR-certified geothermal heat pumps qualify for a separate tax credit and are not counted against these restrictions.)

How to Claim the Energy Tax Credit

Make sure that you take advantage of these two credits if you are eligible. Your home does not have to be your main residence; it only has to be in the US.

To apply for the Residential Energy Property Credit, complete Form 5695 and attach it to your Form 1040.

To ensure that you claim all the energy tax credits that you are eligible for, we recommend filing your taxes online this year.