The Inflation Reduction Act of 2022 extended and expanded many energy tax incentives. This article will focus on energy credits available to individuals for making qualified energy efficient or clean energy home improvements.
Beginning January 1, 2023 and continuing through December 31, 2032, the Energy Efficient Home Improvement Credit provides a credit equal to 30 percent of the costs for eligible home improvements made during the year, subject to certain limitations. Roofing and air-circulating fans do not qualify.
The credit is limited to $1,200 per year with specific annual limits:
- $250 per door ($500 total)
- $600 for certain energy property
- $600 for windows
- $150 for home energy audits
- $2,000 for qualified heat pumps
Qualifying equipment includes:
- Heating & cooling equipment: heat pumps, biomass stoves, efficient air conditioners, heating equipment and water heating equipment.
Other upgrades: electric panel or circuit upgrades for new electric equipment, insulation materials and air sealing, windows, exterior doors, and home energy audits.
The credit is nonrefundable and cannot be carried forward to future years.
The second credit available to homeowners is the Residential Clean Energy Credit, which is available January 1, 2023 through December 31, 2034. The credit percentage is 30 percent of the cost of equipment through 2032; 26 percent in 2033 and 22 percent in 2034. Qualifying clean energy equipment includes solar panels, fuel cells, wind turbines and battery storage. Separately, New York State also provides a 25 percent credit up to $5,000 for solar energy system credit improvements. These credits are nonrefundable however, they can be carried forward to use in future years.
A third credit available to homeowners is the Alternative Fuel Refueling Property Credit, which is available January 1, 2023 through December 31, 2032. The credit is equal to 30 percent of the cost of home electric vehicle charging equipment installed in the home up to a $1,000 credit. Bidirectional charging equipment is included as eligible equipment for this credit. The credit is nonrefundable and it cannot be carried forward to future years.
For additional information, contact Diane Straka, CPA, Partner, at 716.633.1373 or dstraka@tsacpa.com.
