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Energy Efficient Home Improvement Credit

June 12, 2023

Current tax law allows homeowners to receive tax credits for certain energy efficient home improvements including new HVAC, insulation, exterior doors, and windows that meet the energy efficient requirements. This is often an overlooked tax benefit as these expenses are forgotten after the project is completed and therefore are not top-of-mind at tax season.  With summertime approaching and HVAC tune-ups and replacements more frequent, it is important to document any energy efficient home improve-ments so they are not forgotten at tax time.

The amount of the energy efficient tax credits varies depending on the certification of the product installed. The credits are also subject to annual and lifetime caps, so it is important to plan ahead and potentially spread projects out over multiple years to maximize the tax credits each year. It is also important to make sure the project qualifies based on IRS requirements.  Most of the credits apply only to improvements to a principal home and not vacation homes or rentals.

As always, it is recommended that an individual consult a tax professional before engaging in energy efficient home improve-ments to ensure that they will qualify for the tax credit, especially if the tax benefits are a major consideration in deter-mining whether or not to do the project.