Date: August 25, 2023Attorney: Martin D. Hauptman

In an era where sustainable living and energy efficiency are at the forefront of national policy, taxpayers making home energy improvements in 2023 have something to cheer about. The Inflation Reduction Act of 2022 has expanded and increased the amount of tax credits available for those investing in energy-efficient home improvements. This blog post will detail what you need to know about these incentives.

Who Can Claim Energy Credits

There are two main types of energy-related credits available for homeowners:

  1. Energy Efficient Home Improvement Credit (EEHIC)
  2. Residential Energy Clean Property Credit

These credits can be claimed in the year that qualifying improvements are made to a primary home located in the United States.

Important Considerations

  • The credits generally apply to a primary residence, but certain improvements to a second home may also qualify.
  • Renters who invest in energy-efficient products for their rental homes could be eligible as well.
  • The EEHIC applies only to existing homes.

What Qualifies for the EEHIC?

The Energy Efficient Home Improvement Credit is accessible for a broad range of improvements that meet specific energy efficiency requirements. These include:

  • Exterior doors
  • Windows and skylights
  • Insulation materials
  • Central air conditioners
  • Heat pumps and heat pump water heaters
  • Biomass stoves and boilers
  • Home energy audits

Credit Limits:

  • $1,200 for energy property costs, with individual limits for doors, windows, and energy audits.
  • $2,000 per year for qualified heat pumps, biomass stoves, or boilers.

The actual credit amount is based on a percentage of the total cost in the year of installation, and there may be caps under certain circumstances. The EEHIC has no lifetime limit and can be claimed annually until 2033. However, it is non-refundable and cannot be carried over, so planning larger projects across several years could be wise.

Detailed information about eligible improvements is available on

What Qualifies for the Residential Clean Energy Credit?

For those investing in renewable energy, the Residential Clean Energy Credit offers incentives for the following:

  • Solar, wind, and geothermal power generation
  • Solar water heaters
  • Fuel cells
  • Battery storage

The credit amount is typically 30% of the total cost for the tax years 2022-2032, and there are generally no annual or lifetime limits. However, fuel cell property may have specific credit limits.

The Individual Home Energy Tax Credits for 2023 provide valuable incentives for taxpayers seeking to make their homes more energy-efficient or invest in renewable energy sources. The increased and expanded credits can make a significant difference in your tax liability. Whether it’s upgrading windows or investing in solar power, there is a plethora of opportunities to not only make a positive impact on the environment but also enjoy financial benefits. Always consult with a tax professional to ensure you’re meeting all the necessary requirements and maximizing your potential credits.