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Unlock Savings: Discover the Energy Efficient Home Improvement Credit limit for taxpayers

American taxpayers could get up to $3,200 to make their home more energy efficient, $1,200 of which can be claimed each year with home improvements.

Get $3,200 from IRS to make your home more energy efficient

The United States has been seeing some wild weather with extreme heat in the summer and this winter freezing cold plunged deep into the South with the Gulf Coast getting a once-in-a-lifetime epic snowfall. Staying protected from the elements hasn’t been cheap either with rising energy prices to keep the temperature in homes tolerable.

Fortunately, Americans can take advantage of an expanded tax credit to make home improvements to save money on their utilities. The Energy Efficient Home Improvement Credit was increased from a lifetime limit of $500 to $1,200 that can be claimed for expenses each year until the end of 2032. Additionally, taxpayers that install a heat pump and biomass stove or boiler can access a $2,000 credit.

How does the Energy Efficient Home Improvement Credit work?

Under the Inflation Reduction Act of 2022 the amount of the Energy Efficient Home Improvement Credit available to taxpayers was increased to $1,200 which could be claimed on an annual basis. Beginning January 1, 2023, the amount of the credit is equal to 30% of the sum of amounts paid by the taxpayer during the taxable year for:

  • Qualified energy efficiency improvements installed during the taxable year:
    • exterior doors (30% of costs up to $250 per door, up to a total of $500 if multiple doors are installed);
    • exterior windows and skylights (30% of costs up to $600); and
    • insulation materials or systems and air sealing materials or systems (30% of costs up to $1,200).
  • Residential energy property expenditures:
    • capped at $600 per item of property (except for heat pump water heaters and heat pumps, and biomass stoves or boilers)
  • Home energy audits:
    • capped at $150 (beginning Jan. 1, 2024: must be performed by a Qualified Home Energy Auditor or under the supervision of a Qualified Home Energy Auditor)

Note that there are limits on the allowable annual credit and on the amount of credit for certain types of expenditures. You can check with the manufacturer or retailer to ensure the product is eligible for the tax credit or on the Energy Star website.

In order to claim the credit when you file your tax return you must fill out Form 5695. For complete details the IRS provides a Frequently Asked Questions page for the credit that was updated on January 17, 2025.

Additionally, the IRA 2022 extended the Residential Clean Energy Property Credit, a 30% credit for certain qualified expenditures made by a taxpayer for residential energy efficient property, with no lifetime credit limit through 2034. The applicable credit percentage rates were also modified and qualified battery storage technology was added as an eligible expenditure.

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