The 2022 Inflation Reduction Act revamped the energy tax credit system to provide more credits and turn lifetime limits into annual ones, making it easier for people to afford energy-efficient equipment. These changes kicked in on January 1, 2023. Learn about the new tax credit system before you start renovating your property, as you might be surprised by how much money you could save.
What is an Energy Tax Credit?
An energy improvement tax credit incentivizes home and business owners to buy environmentally friendly products that reduce their carbon footprint, potentially slowing the effects of climate change. Consumers who install qualified products might be eligible for an Energy Efficient Home Improvement Credit or Residential Clean Energy Credit.
A tax credit reduces the amount that individuals must pay during tax season. For example, if an individual’s credit totals $200, they can deduct that amount when they pay the IRS. This helps them recoup some of the costs of buying new energy-efficient windows or doors.
Consumers can also look up product rebates for an additional discount. Instead of an immediate discount, a rebate repays the individual a portion of the cost. Most rebates require consumers to mail a form to the manufacturer, but you can apply for some rebates online.
An energy improvement tax credit helps homeowners honor their values while also saving money. These credits offer hefty incentives, giving you a potential tax rebate for purchasing products that also help reduce your carbon footprint. Both the Energy Efficient Home Improvement Credit and the Residential Clean Energy Credit could be your ticket to lower utility bills and a lower tax bill to boot, but each program has slightly different rules.
Energy-Efficient Home Improvement Credit
The Energy Efficient Home Improvement Credit changed going into 2023. For qualifying improvements made through December 2022, homeowners are eligible for a maximum $500 lifetime credit. Starting on January 1, 2023, through December 21, 2023, that credit amount is amended to cover up to 30% of qualifying purchases with a maximum annual credit of $1,200. Credit allowances change based on purchase type. For instance, exterior doors have a maximum credit of $250 each, with an annual $500 limit. Several other products, including windows, have a $600 limit.
Thompson Creek Window Company has windows and doors that qualify for the 2023 Tax Credit.
Learn more about the next steps to take to qualify for the 2023 Energy Efficient Home Improvement Credit, and schedule a no-obligation consultation with our representatives to find out more about our full list of eligible products.
Residential Clean Energy Credit
The Residential Clean Energy Credit is a tax break that specifically targets the installation of devices that help generate renewable energy. Homeowners are eligible for credits that reflect 30% of qualifying purchases, with total credit amounts allowed based on factors such as total kilowatt capacity and the number of people living at the residence.
This benefit encourages individuals to invest in renewable power sources like wind and solar. Before the Inflation Reduction Act, individuals could receive a 26% credit that would drop in the next year and later expire. The new program increases the tax break and keeps it active until 2032. Qualifying battery-storage technology is a new addition to the credit.
What is ENERGY STAR?
The ENERGY STAR program helps Americans buy energy-efficient products for residential and commercial use. Eligible products include a variety of windows, such as storm windows, and doors designed to maximize conservation. Certified appliances display the ENERGY STAR label that tells consumers that they’re buying an environmentally friendly product.
ENERGY STAR can also apply to entire buildings. The program evaluates the building’s energy use, insulation, HVAC units, energy sources, and other factors to calculate the score. Surveyors also consider external factors, such as the climate and number of people in the building, to provide a fair assessment.
Start Renovating Today
Efficient appliances don’t just provide tax breaks, they help you save money all year round by lowering your utility bills. Some products use less energy than older appliances, which offsets the initial cost. Other products, such as efficient storm doors, insulate your house to prevent drafts that force your HVAC system to run for longer periods of time.
Thompson Creek offers ENERGY STAR-qualified windows and doors that may qualify for a tax credit. Contact Thompson Creek to get a free estimate for your project. We can recommend additional products that save even more money.