By making eligible energy-efficient improvements to their primary residence, taxpayers are able to take advantage of the Residential Clean Energy Credit and the Energy Efficient Home Improvement Credit.

Owners of second homes used as residences and renters may both be eligible for the credits. Landlords are not eligible for credits.

Energy Efficient Home Improvement Credit

If made after January 1, 2023, energy-efficient improvements could result in a tax credit of up to $3,200. 

The following are examples of qualified energy-efficient upgrades that may have been installed during the year:

• Skylights, windows, and doors on the outside
• Materials or systems for insulation and air sealing

Expenses for residential energy properties include:

• Central air conditioning units
• Oil, gas or natural gas water heaters
• Furnaces and hot water boilers powered by natural gas, propane or oil
• Heat pumps, boilers, biomass stoves, and water heaters
• Energy assessments of a primary residence

The highest credit amount that may be requested each year is:

• $1,200 for energy-related expenses and some energy-saving home upgrades with restrictions on doors, windows, and home energy audits
• $2,000 per year for approved heat pumps, stoves made of biomass, or boilers made of biomass

The credit is nonrefundable, which means that taxpayers cannot use it to offset any additional tax liabilities and cannot be carried over to subsequent tax years.

Residential Clean Energy Credit

An annual resident clean energy tax credit may be available to taxpayers who make investments in energy efficiency upgrades for their primary residence, such as solar, wind, geothermal, fuel cells, or battery storage.

For a home in the United States installed at any time between 2022 and 2033, the Residential Clean Energy Credit is equal to 30% of the cost of new, qualified clean energy property.  

To be eligible for the Residential Clean Energy Credit, the clean energy equipment must adhere to certain requirements.

Amounts spent on brand-new, eco-friendly energy machinery like: 

• Panels for solar electricity
• Sun-powered water heaters
• heated by geothermal energy