As a homeowner, there are many ways you can make your property more energy-efficient. Did you know that the government will pay you to make some of those changes?
Through legislation like the Inflation Reduction Act, you can achieve significant tax credits when you make energy-conscious adjustments to your home. This includes updating your old, drafty windows with newer, more eco-friendly models.
Today, we’re sharing everything you need to know about the new window tax credit.
What Is the Inflation Reduction Act?
The Inflation Reduction Act was signed into law on August 16, 2022. It includes $500 billion in new spending and tax breaks designed to cover three main initiatives:
- Reduce carbon emissions and boost clean energy
- Reduce healthcare costs
- Increase tax revenues
Heralded as the most ambitious climate package in our nation’s history, this act seeks to reward households that take steps to improve their energy efficiency. From heat pumps and stoves to insulation and electrical panels, there are many installations that qualify.
If you’re renovating an existing property, one of the easiest ways to take advantage of this opportunity is to install new, energy-efficient exterior windows and skylights.
Understanding the New Window Tax Credit
The most recent tax credit for windows and skylights came into effect in 2023. To be eligible for this credit, the products you purchase must be installed between January 1, 2023, and December 31, 2032.
The maximum credit amount awarded is $600. You can claim up to 30% of your project’s total cost until you reach that maximum.
Eligibility Criteria
There are only certain types of windows that will qualify for this credit. To be approved, the ones you install must meet the criteria set forth by the ENERGY STAR Most Efficient program. You can find details about the program here.
To apply for home improvement tax credits, you must make the changes to an existing home, and that home must be your primary residence. Note that any type of new construction does not apply. Rental units are also disqualified.
Annual Limits
As mentioned, there are limits on the amount of tax credit you can claim for a specific installation or home improvement. In addition, there are also annual limits that apply to your total project. Homeowners cannot claim any more than $3,200 per year in efficiency tax credits.
This breaks down into the following categories:
- Home envelope upgrades (windows/skylights/doors, electrical, insulation, boilers, central HVAC): Annual limit of $1,200
- Heat pumps/heat pump water heaters/biomass stoves: Annual limit of $2,000
If you’re planning to use the window or skylight tax credit, keep these limits in mind.
Note that there is also an exterior doors tax credit, that would apply under the Home Envelope Upgrades category. Installing new windows and doors can help your home hold in warm or cool air. This allows your HVAC system to work more efficiently and uses less power.
Find Energy-Efficient Windows Today
Ready to take advantage of the new window tax credit? If so, you’ll need to know the right windows to install. Use the ENERGY STAR criteria list to search for products that qualify.
In the meantime, we’re here to keep you updated with all of the money-saving tips you need. For instance, another way to make your home more energy-efficient and affordable is to consider solar panels. Use our Solar Calculator to estimate your savings today!
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