Dear Eartha, as I was doing my taxes, I noticed there are credits available for energy efficiency projects. How can I qualify?
From energy-efficient windows to heat pumps to renewable energy, Uncle Sam has tax credits to help you boost the comfort and durability of your home. Since tax season is already upon us, here’s a rundown of incentives to keep in mind for next year – and to help you plan for this summer’s project season (but please don’t ask Eartha to do your taxes for you).
Energy Efficient Home Improvement Credit
To qualify for this $3,200 tax credit, energy-efficiency improvements must be made to your primary residence – that is, where you live full-time. It’s not valid for new builds, and properties used for business purposes have special rules. The credit has no lifetime limit, meaning you can claim it every year you make improvements, but it’s nonrefundable, so it can’t exceed your tax liability, and any excess cannot be applied to future years. Homeowners can claim 30% of the cost (up to defined maximums) on the items listed below. More details are available on the IRS website – be sure to verify the specific requirements before moving forward with any projects.
Home Energy Assessments
Why is the federal government incentivizing home energy assessments? Because an assessment provides a tailored roadmap for efficiency projects best suited to your home. To qualify for federal, local, and utility incentives, the assessment must be performed by a certified energy analyst, but don’t fret. Certified energy analysts right here in the county can help you out.
Building Envelope
The results of most home energy assessments in Summit County show that our homes’ building envelopes need some TLC. The building envelope is the boundary between the inside of your home and the exterior. Think: walls, windows, doors, insulation, siding…you know, all the components that work together to keep warm air inside. And improving your envelope – usually through air sealing and insulation – can significantly impact your space’s comfort and efficiency. Pro tip: Have your contractor list materials separate from labor; the tax credit only applies to materials.
Heat Pumps & Heat Pump Water Heaters
These systems work wonders by pulling heat energy from the outdoor air and transferring it inside, doubling up as both a heater and air conditioner. Heat pumps run on electricity, making them a climate friendly alternative to home heating. With models designed for cold climates, they’re pretty hot…and cool – puns intended. They are also incredibly efficient, earning them up to $2,000 in credits from the folks in Washington D.C.
Residential Energy Property
This is the IRS’ fancy term for certain heating and cooling equipment, like furnaces and boilers. You can earn up to $600 in credit for purchase and installation of eligible equipment. The word “eligible” is key – not just any furnace or boiler will do. So if you’re shopping for a new one, do your research to make sure your desired equipment makes the cut. Residential Clean Energy Credit Interested in generating your own electricity at home? Available for both new and existing homes, this credit provides a 30% tax discount for the installation of equipment like solar panels, solar water heaters, and geothermal heat pumps. And the IRS says that you may be able to claim the credit on a second home as long as you live there part-time.
Planning for April 15, 2025
Now, how do you actually claim these credits? The information here is intended for educational purposes so that you can get credit for all the great energy efficiency and renewable energy projects you’re planning for your home. But when it comes to doing your taxes and claiming the credits, this is a case of “please don’t Ask Eartha.” Whether you use an online tax platform or a dedicated tax professional, remember keep track of your expenses to make your life easier at tax time.
But wait, there’s more! In addition to the federal tax credits, in Summit County, you have access to local energy efficiency and renewable energy rebates offered by the High Country Conservation Center and Xcel Energy. With all these incentives, homeowners have ample opportunity to plan improvements and maximize tax benefits. It’s a win-win for both your pocket and the planet!
Ask Eartha is written by the staff at the High Country Conservation Center, a nonprofit dedicated to waste reduction and resource conservation. Submit questions to Eartha at info@highcountryconservation.org.