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Home Energy Tax Credits for 2023

There might be tax credits from the projects you've done or plan to do.


KEY TAKEAWAYS

  • If you've made improvements to your home's energy use, you may be eligible for the EEHI and/or the RECP tax credits.

  • Avoid leaving money on the table and explore your options to lower the cost of certain home improvement projects.

 

What do home improvements and tax planning have in common?


They never end.


If you’ve made improvements to your home’s energy use, you may be eligible for Federal tax credits – emphasis on credits because they are more valuable than deductions.


Thanks to the Inflation Reduction Act passed in 2022, two tax credit programs were amended to make them last longer and have a greater impact.


***FMI includes tax prep, filing, and planning in its service. Learn more.***


Energy Efficient Home Improvement Credit (EEHIC)


This credit would apply to home improvements that meet certain energy efficiency requirements, including:

  • Exterior doors

  • Windows/skylights

  • Insulation materials

  • Home energy audits

  • Central air conditioner

  • Biomass stoves and boilers

  • Heat pumps/heat pump water heaters

The maximum credit each year varies by the project/improvement:

  • $2,000 per year for qualified heat pumps and biomass stoves/boilers

  • $1,200 for energy property costs with limits on:

    • Exterior doors ($250/each up to $500 total)

    • Windows ($600)

    • Home energy audits ($150)

There is no lifetime dollar limit, so credits can be claimed every year that eligible improvements are made until 2033.

Pro Tip: Because the EEHIC is not refundable and can’t be carried over to another tax year, it might make sense to spread large projects over several years to maximize tax credit opportunities.


Residential Energy Clean Property Credit (RECPC)


This credit would apply towards investments made in renewable energy:

  • Solar, wind, and geothermal power generation

  • Solar water heaters

  • Battery storage

  • Fuel cells

Generally, the credit amounts are a set percentage of the total cost of the investment in the year of installation. From now until 2032, that percentage is set at 30%, and there is no annual maximum or lifetime limit.

You might be wondering, “Does a new roof count?”

Typically, upgrades to or replacing a roof don’t count because they primarily serve as a structural function. But, if you invest in certain solar roofing tiles and shingles that are both solar generation and structural, those can qualify for the credit.

Pro Tip: We can help determine if these solutions are worth the investment. Do not go the “no money down” road, and consider the future cost of electricity.


Conclusion


These are just Federal programs. Be sure to check state and local levels as well as local utility programs to lower the cost of these investments.

One of our mantras is, “It’s not what you make – it’s what you keep.” Taxes are your largest expense, and it takes proactive communication and planning to make sure you’re not leaving money on the table.

Knowing about these programs means more for your bottom line.


Frank Iozzo, CPWA®

President, Private Wealth Advisor


 

Are you leaving money on the table?

Click here to schedule a free, 30-minute consultation to learn how we can help.

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