2023 Nonbusiness Energy Property Credit
Energy Efficient Home Improvement Credit
IRC Section 25C
Beginning with year 2023, the Inflation Reduction Act of 2022 modifies, expands and extends the nonbusiness energy property credit for certain energy-efficient home improvements, through year 2032 by increasing the credit from 10 percent to 30 percent. It also renames the credit to "Energy Efficient Home Improvement Credit." The lifetime cap on the credit of $500 is replaced with a $1,200 annual credit limitation, except in the case of heat pumps and biomass stoves, for which the credit may be up to $2,000. Homeowners can only receive a credit of up to $600 for windows or skylights; $250 for one door; or $500 for multiple doors. They can also receive up to $150 for a home energy audit.
The maximum energy efficient home improvement credit is $3,200.
Qualified energy property that is eligible for the credit covers a range of products, including exterior doors, exterior windows and skylights, insulation, water heaters, heat pumps, central air conditioners, hot water boilers, biomass stoves, oil furnaces, air sealing materials and systems, costs of home energy audits, and electrical panels installed to enable qualified improvements, with specific efficiency requirements for each upgrade.
Metal roofs and shingle roofs with pigmented coatings to help reduce heat gain are no longer eligible for the credit.
Beginning with tax year 2024, there is also new mandated reporting requirements that manufacturers and taxpayers must label and report, respectively, a product identification number associated with the energy property in order to claim the credit.
Click here for more details about residential energy credits.
