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Tax Credits for Home Energy Efficiency

Federal tax credits for home energy upgrades were recently expanded and extended. Here's the latest.

Tax-Credits-for-Home-Energy-Efficiency

Home energy upgrades are a great way to save money and reduce your environmental footprint, but the initial cost can be expensive. Fortunately, there are a variety of federal tax incentives here to help. The Inflation Reduction Act passed in 2022 expanded and extended a series of tax credits for home energy improvements.

Home energy-efficiency improvements

Federal tax credits of up to the 30% of the cost of qualifying home improvements are available for projects installed between January 1, 2023 and December 31, 2032. Each project is subject to individual maximum amounts, which are specified below. Only improvements made to existing homes that are the principle residence of the taxpayer can qualify for these credits.

Home weatherization

  • Exterior doors (maximum $250 per door, $500 total). Eligible doors must be ENERGY STAR®-certified.
  • Windows and skylights ( $600 maximum). Windows and skylights must meet ENERGY STAR® most efficient product requirements.
  • Insulation and air sealing ($1,200 maximum). Includes insulation, weatherstripping, caulk and expandable foam. Materials or systems must meet International Energy Conservation Code requirements.

Equipment upgrades

  • Furnaces ($600 maximum). ENERGY STAR-certified gas furnaces with an Annual Fuel Efficiency (AFUE) rating of 97% or more are eligible.
  • Water heaters ($600 maximum). ENERGY STAR-certified gas storage and tankless water heaters are eligible.
  • Boilers ($600 maximum). ENERGY STAR-certified gas boilers with an AFUE of more than 95% are eligible.

You can also claim up to $150 to cover the cost of a home energy audit. The audit must include an inspection of a dwelling that is the principle residence of the taxpayer as well as written report detailing recommended energy improvements and associated cost and savings estimates. The audit must be conducted by a certified home energy auditor.

State and local financial incentives may be available in your area for these and other energy-efficiency upgrades. By taking advantage of these incentives, you can reduce your energy bills and your environmental footprint with making too big a dent on your budget.

In addition, Appalachian Power offers everyday rebates on a variety of ENERGY STAR certified appliances. Visit our rebates page.