New Home Energy Tax Credits Starting In 2023

Gone are the days of a $500 lifetime credit for qualified home improvement energy equipment. These old tax rules expired with tax year 2022. Welcome to a new decade of home energy credits as enacted and allowed under the Inflation Reduction Act (IRA) of 2023.

Starting with tax year 2023, you may be eligible for a residential home energy credit worth up to $1,200 for each tax year (currently enacted through 2032) for qualifying home improvement energy equipment bought and installed on your primary home.

The following expenses may qualify for the tax credit if they meet the efficiency requirements listed on

  • Exterior doors, windows, skylights, and insulation materials

  • Central air conditioners, water heaters, furnaces, boilers and heat pumps

  • Biomass stoves and boilers

  • Home energy audits

The amount of the credit a taxpayer can take is a percentage of the total improvement expenses in the tax year of installation. For 2023, the percentage is 30%, up to a maximum of $1,200. However, heat pumps, biomass stoves and boilers have their own separate annual credit limit of $2,000. Combined, this would allow a credit of up to $3,200 in one year.

[ALERT] Starting in 2024, taxpayers will be required to provide a manufacturer-provided PIN in order to file a tax return with these credits!

In addition, a taxpayer may also qualify for residential clean energy credits that apply to the following expenses. There is not an annual dollar maximum for this credit, but it is still 30% of the qualifying property. For example, qualifying solar panels installed on your roof that cost $10,000 could result in a $3,000 tax credit.

  • Solar, wind, and geothermal power generation

  • Solar water heaters

  • Fuel Cells

  • Battery storage

Please contact GWCPA if you have any questions about the applicability of these credits.