What are the Energy Tax Credits for Homeowners?

energy tax credits

The Bipartisan Budget Act provided a huge relief to taxpayers across the nation. Many tax credits were extended, with many of them applying to green upgrades on residential properties.

If you made any such improvements, you can continue to claim these energy tax credits through IRS Form 5695.

But which energy tax credits qualify for homeowners?

Windows, Doors, and Skylights

Did you make any energy-efficient upgrades with new windows, a door, or a skylight? You could be eligible for a Federal windows tax credit. As long as the upgrades met Energy Star standards, you will qualify to claim the energy tax credit.

This credit is worth 10% of the cost and a maximum of $200 and $500 for windows/skylights and doors respectively.

Asphalt and Metal Roofs

If your roof meets Energy Star standards, your roof will reflect more of the sun and reduce surface temperatures by up to 100 F. Metal roofs with pigmented coatings and asphalt roofs with cooling granules will qualify for this.

You can claim back 10% of the cost up to a maximum of $500.

Non-Solar Water Heaters

Water heaters using oil, gas, or propane are all eligible, as long as they have what’s known as an energy factor of 0.82 or up. They must also come with a thermal efficiency of 90% or up.

If you happen to have an electric heat-pump heater, then it must have an energy factor of at least 2.0.

This credit is worth a flat $300.

Home Insulation

Bulk insulation products may also qualify for a tax credit if they meet Energy Star standards. Anything that reduces air loss, weather stripping, or caulk can also qualify if you possess a certification statement from the manufacturer.

You can claim 10% of the cost, with a maximum limit of $500.

Biomass Stoves

Biomass stoves burn wood and other wood waste products to create energy. These also qualify for a $300 tax credit, but they must have a thermal efficiency of 75%, and they must meet EPA standards under the 2020 Clean Air Standards document.

AC, Heating, and Ventilation

Certain products used for AC, ventilation, and heating will also qualify for a tax credit. For AC’s, the tax credit is worth $300, heat pumps are worth $300, and boilers using gas, propane, or oil are worth $150. Any furnaces using natural gas, oil, or propane can yield a $150 tax credit.

You should check for details on the Energy Star website as the limits are extremely strict.

Geothermal Heat Pumps

Geothermal heat pumps utilize the heat coming from the Earth, so they’re some of the most efficient upgrades you can make.

There’s no upper limit on this tax credit, and you can claim back 30% of the cost. This tax credit can also be taken when installing a pump in a second home.

Wind Turbines

A residential wind turbine is another highly efficient upgrade. Like with geothermal pumps, you can claim back 30% of the total cost, there’s no upper dollar limit, and you can claim it on second homes.

The Future of Green Energy Tax Credits

Under the current rules, these tax credits become worth less each year. For upgrades installed before December 31st, 2019, the full 30% tax credit applies.

For systems installed after this date but before January 1st, 2021, the credits are worth 26%. For systems put into service after December 31st, 2020, but before January 1st, 2022, the credits are worth 22%. You should keep all certificates, statements, and receipts.

How Can I Claim My Energy Tax Credits?

When you file your taxes online, you can be ensured that you are going to be able to claim the energy tax credit. The tax filing software is able to recommend you with the best choices and show you which deductions and credits you qualify for. They also do the math and fill in all the right tax forms.

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