Home energy-efficient tax credit extensions with IRA

If you are planning to make some improvements to your home to improve or increase its energy efficiency, you should know that you can save some money thanks to the Inflation Reduction Act.?

One of the main goals of the law is to confront climate change and stop global warming. And while the measures mostly focus on companies adopting more environmentally friendly processes, there are also incentives for citizens who are committed to ecological responsibility.?

How can families participate in these incentives?

Homeowners can further reduce their tax bills by installing new energy-efficient windows, doors, water heaters, air conditioners, and other items. That's because the legislation extends and enhances two tax credits that reward "green" improvements to your home.

One of the tax credits that homeowners may be familiar with is the Nonbusiness Energy Property Credit; this credit expired at the end of 2021, however, the Inflation Reduction Act brings it back and substantially improves it, and even gives it a new name: the Energy Efficiency Home Improvement Credit and which has been extended through 2032.

Beginning in 2023, the credit will be equal to 30% of the costs of all qualifying home improvements made during the year. It will also be extended to cover the cost of certain biomass stoves and boilers, electric panels and related equipment, and home energy audits. However, roofs and air circulation fans will no longer be eligible for the credit.?

The second credit for which homeowners are eligible is the existing Residential Energy Efficient Property Credit, which is also being renamed: the Residential Clean Energy Credit. The credit, which was previously scheduled to expire in 2024, is also extended through 2034.

The Inflation Reduction Act will increase the amount of credit from 26% to 30%.

Another perceived adjustment is that the credit will no longer apply to biomass furnaces and water heaters starting in 2023; instead, it will apply to battery storage technology with a capacity of at least three-kilowatt hours.

The efforts to bring people closer to the commitment to the environment are quite significant; the incentives have been designed so that each person is encouraged to be part of the positive changes.?

If you would like to learn more about the incentives and how you can apply, you can schedule a meeting with one of our experts