How to Qualify for the Tax Credit in 2023
From the windows, to the walls… the Inflation Reduction Act is creating energy efficiency rebates and tax credits for all kinds of energy efficient home upgrades.
We’re talking energy efficient windows, patio doors, and energy upgrades like solar panels… which are coming soon with Synergetic Home.
These new incentives took effect on January 1, 2023, there’s going to be a lot on the table. So we’re taking a project-by-project approach to show you which energy efficiency rebates and tax credits will be available to you, and how to claim them.
The following energy efficient home improvements are eligible for the Energy Efficient Home Improvement Credit:
1. Building envelope components satisfying the energy efficiency requirements in Q1 under the Energy Efficiency Requirements section:
• Exterior doors (30% of costs up to $250 per door, up to a total of $500);
• Exterior windows and skylights (30% of costs up to $600); and
• Insulation materials or systems and air sealing materials or systems (30% of costs).
2. Home energy audits (30% of costs up to $150, see Q5 under the General Questions section.
3. Residential energy property (30% of costs, including labor, up to $600 for each item) satisfying the energy efficiency requirements in Q1 under the Energy Efficiency Requirements section:
First, let’s look at the two types of energy efficiency incentives:
1. Purchase and install qualifying windows or patio doors that meet ENERGY STAR® Windows Program version 6.0 performance requirements beginning January 1, 2023 through December 31, 2023*
2. Save your sales receipt, a copy of the Manufacturer’s Certification Statement, your product labels or a product performance (NFRC Ratings/ ENERGY STAR Qualification) sheet with your tax documents.
• Download the applicable Manufacturer’s Certification Statement for your products.
• Save your product performance labels from your window(s) or door(s) or take a photo of the labels on your windows(s) and door(s) and keep it with your tax documents. Alternatively, you can download the Product Performance NFRC Ratings/ ENERGY STAR version 6.0 Qualifications Sheet (see the attachments at the bottom of the page) applicable to your product. This document shows you which products meet ENERGY STAR version 6.0 performance criteria for your area.
3. Claim the tax credit associated with your qualifying purchase and installation on your Federal filing for the applicable tax year.
Is there a limit on the amount of Energy efficient home improvement credit that you can claim?
Yes. There is a $1,200 aggregate yearly tax credit maximum for all building envelope components, home energy audits, and energy property. Electric or natural gas heat pump water heaters, electric or natural gas heat pumps, and biomass stoves and biomass boilers have a separate aggregate yearly credit limit of $2,000. Thus, the maximum total yearly energy efficient home improvement credit amount may be up to $3,200. See Q1 under the Examples section, for a set of examples illustrating how these credit limits work.
Learn More About ENERGY STAR
Find more information at www.energystar.gov or call (888) STAR-YES/ (888-782-7937)
Visit ENERGY STAR to determine your ENERGY STAR Climate Zone
This is a summary of the tax credit elements related to windows and doors as set forth in Section 25C of the Internal Revenue Code as modified by the Inflation Reduction Act of 2022, Public Law No. 117-169, which was signed by the President on August 16, 2022, which among other things, extends the current tax credits in Section 25C of the Internal Revenue Code on eligible property purchased and installed through December 31, 2023. Synergetic Home does only verifies that its products with an ENERGY STAR label meet the ENERGY STAR version 6.0 performance criteria for the particular climate zones indicated on the label at the time the product was manufactured. Synergetic Home does bears no responsibility for determining whether a particular purchase or application qualifies for the tax credit. Further, Synergistic Home does not intend to and is not providing legal or tax advice and recommends that purchasers consult their own tax advisor or the IRS to determine whether the products they purchase for a particular application qualify for the tax credit.
Windows and patio doors with select glass options qualify in many U.S. ENERGY STAR version 6.0 climate zones when used for remodeling, replacement or home improvement. As the ENERGY STAR version 6.0 criteria differs by climate zone, please review the ENERGY STAR requirements in the climate zone where the product will be installed and refer to the respective product NFRC Ratings/ ENERGY STAR version 6.0 Qualifications sheet to select the product. Please consult your tax planner and review all IRS guidelines. Synergetic Home is not a tax advisor.
These credits, which include the aggregate of all current and prior taxable years, cannot exceed the maximums listed for any taxpayer.
Current federal tax credits for certain energy-efficient improvements to existing homes are valid through December 31, 2023. If you purchased and installed a qualifying product in 2023, then you may qualify for this tax credit.