7 federal tax credits for energy efficiency upgrades.
Making energy efficient upgrades to your home can lower your energy bill, make your home more comfortable and reduce your environmental impact. Energy upgrades may also offer significant tax savings.
The federal government offers several tax credits to encourage homeowners and renters to invest in energy-saving improvements. Be sure to speak with your tax advisor for the latest information on local, state or federal tax credits.
Here are some of the top federal tax credits you can claim to make your home more energy efficient.
#1 — Residential Clean Energy Credit
This credit, formerly the Residential Energy Efficient Property Credit, allows homeowners to claim up to 30% of the cost of installing renewable energy systems (IRS.gov). Eligible systems include:
- Solar panels (photovoltaic systems)
- Solar water heaters
- Wind turbines
- Geothermal heat pumps*
- Battery storage systems
*If you’re considering a geothermal heat pump, check out our $3,000 rebate!
#2 — Energy Efficient Home Improvement Credit
Previously called the Nonbusiness Energy Property Credit, this tax credit was recently expanded (TurboTax). If you make qualifying improvements after January 1, 2023, you may be able to claim up to $3,200 annually for qualifying energy-efficient upgrades (IRS.gov), including:
- Insulation and airs ealing materials or systems*
- Heat pumps*
- Water heaters
- Exterior doors
- Exterior windows and skylights
*If you’re thinking about insulation, air sealing or having a new heat pump installed, reach out to a member of our Quality Contractor Network to learn more about incentives from TVA EnergyRight and your local power company.
Explore TVA EnergyRight rebates
#3 — Electric panel upgrade tax credit
If you’re upgrading your home’s electric panel to accommodate new energy-efficient systems, you can claim up to 30% of the cost, up to $600. This credit helps ensure your home’s electrical system can handle increased loads from new appliances or renewable energy installations (ENERGYSTAR.gov).
Source: Energy.gov – Tax Credits for Energy Efficiency
#4 — Energy efficient HVAC systems
As part of the Energy Efficient Home Improvement Credit, your heating, ventilation, and air conditioning (HVAC) systems may also qualify for a credit (ENERGYSTAR.gov). Tax credits may be available for installing:
- Energy-efficient air conditioners*
- Heat pumps*
- Furnaces
- Boilers
*Rebates from TVA EnergyRight and your local power company are also available on qualifying heat pumps, ductless mini-splits, and 15 SEER2 or higher central air conditioning units.
Central air conditioner rebates
#5 — Home energy audit tax credit
A professional home energy audit helps identify areas where your home is losing energy. The Energy Efficient Home Improvement Credit covers 30% of the cost of a home energy audit, up to $150 (Energy.gov). Find a TVA-vetted professional for your Home Energy Evaluation and start saving.
Or, if you’d rather start with a free, DIY Home Energy Assessment, we can help with that, too!
#6 — Energy-efficient water heaters
Replacing an old tank-style water heater with a more energy-efficient on-demand or heat pump model may qualify for a tax credit.
#7 — Smart thermostats
Smart thermostats “learn” your heating and air conditioning preferences (and your schedule) and adjust heating and cooling accordingly to optimize energy use. They may not be eligible for federal credits on their own, but installation costs may be eligible as part of a bigger HVAC upgrade.
Fortunately, we have you covered! Check out our Smart Thermostat Rewards program and learn more about our instant rebate. Or, check out our Smart Thermostat FAQs for more information.
DISCLAIMER: TVA EnergyRight and local power companies do not provide tax, legal or accounting advice. This blog is intended for informational purposes only and should not be relied on for tax, legal, or accounting advice. Consult your own tax, legal, and accounting advisors for more information.
