Energy Efficient Home Improvement Credit
Taxpayers who install qualified energy‑efficient improvements in their main home may claim an annual credit of up to $3,200. The credit equals 30% of qualified expenses, including:
- Qualified energy efficiency improvements
- Residential energy property expenses
- Home energy audits
The credit is available for property installed through 2032. It is nonrefundable and cannot be carried forward.
Annual Limits
- $1,200 total for energy property and certain home improvements
- Doors: $250 per door, $500 total
- Windows and skylights: $600 total
- Home energy audits: $150
- Labor for installing building envelope components does not qualify
- $2,000 for heat pumps, biomass stoves, and biomass boilers
- Labor for installation does qualify
There is no lifetime limit; taxpayers may claim the maximum each year.
Home Requirements
The home must be:
- Located in the United States
- An existing home, not new construction
- Used as the taxpayer’s main home
Landlords cannot claim the credit for rental property they do not live in. Renters may claim the credit for certain improvements, except for doors, windows, skylights, insulation, and air‑sealing materials, which require home ownership.
Business Use Rules
- Business use ≤ 20% → full credit
- Business use > 20% → credit allowed only for the nonbusiness portion
Qualified Property
Residential energy property (up to $600 per item) includes:
- Central air conditioners
- Natural gas, propane, or oil water heaters
- Natural gas, propane, or oil furnaces and boilers
Home energy audits must include a written report identifying recommended improvements and estimated savings.
Taxpayers claim the credit on Form 5695, Part II, for the year the property is installed.
Residential Clean Energy Credit
Taxpayers who install qualified renewable energy systems may claim a credit equal to:
- 30% of qualified costs for property installed through 2032
- 26% for 2033 installations
- 22% for 2034 installations
The credit is nonrefundable, but unused amounts may be carried forward. There is no annual or lifetime limit except for fuel cell property.
Fuel Cell Limits
- $500 per half‑kilowatt of capacity
- Maximum for all residents of a home: $1,667 per half‑kilowatt
Eligible Homes
The credit applies to a taxpayer’s main home, whether owned or rented. A second home may qualify for certain improvements, except fuel cell property.
Business Use Rules
- Business use ≤ 20% → full credit
- Business use > 20% → credit allowed only for the nonbusiness portion
Qualified Property
- Solar electric panels
- Solar water heaters
- Wind turbines
- Geothermal heat pumps
- Fuel cells
- Battery storage technology
Labor for installation and necessary wiring or piping qualifies. Used property does not qualify. Traditional roofing materials do not qualify unless they generate energy (e.g., solar shingles).
Taxpayers claim the credit on Form 5695, Part I, for the year the property is installed.
Clean Vehicle Credits
Clean Vehicle Credits include:
- New Clean Vehicle Credit
- Used Clean Vehicle Credit
Taxpayers claim these credits on Form 8936. The vehicle’s VIN must be included.
Business Use
If a vehicle is used for both business and personal purposes, the credit is based on the percentage of non‑commuting business miles divided by total miles.
New Clean Vehicle Credit
Taxpayers who place in service a new qualified plug‑in electric vehicle (EV) or fuel cell vehicle (FCV) may claim up to $7,500. The credit is nonrefundable.
Income Limits
MAGI must not exceed:
- $300,000 MFJ or surviving spouse
- $225,000 HOH
- $150,000 all others
Taxpayers may use MAGI from the current year or the prior year.
Vehicle Requirements
A qualifying vehicle must:
- Have a battery capacity of at least 7 kWh
- Have a GVWR under 14,000 lbs
- Be made by a qualified manufacturer (FCVs exempt)
- Undergo final assembly in North America
- Meet critical mineral and battery component requirements
MSRP Limits
- $80,000 for vans, SUVs, and pickup trucks
- $55,000 for all other vehicles
Credit Amount
- $3,750 for meeting the critical minerals requirement
- $3,750 for meeting the battery components requirement
- $7,500 if both are met
Used Clean Vehicle Credit
Taxpayers may claim a credit for purchasing a previously owned qualified EV or FCV from a licensed dealer for $25,000 or less.
Credit Amount
- 30% of the sale price
- Maximum credit: $4,000
- Nonrefundable
Taxpayer Requirements
The taxpayer must:
- Buy the vehicle for personal use
- Not be the original owner
- Not be claimed as a dependent
- Not have claimed a used clean vehicle credit in the prior 3 years
- Have MAGI below:
- $150,000 MFJ
- $112,500 HOH
- $75,000 all others
MAGI from the current or prior year may be used.
Vehicle Requirements
The vehicle must:
- Have a sale price of $25,000 or less
- Have a model year at least 2 years earlier than the purchase year
- Not have been transferred after August 16, 2022, to a qualified buyer
- Have a GVWR under 14,000 lbs
- Have a battery capacity of at least 7 kWh
- Be used primarily in the U.S.
Dealers must report required information to both the taxpayer and the IRS.