Residential Energy Efficiency Tax Credit
Note: The Bipartisan Budget Act of 2018 reinstated this tax credit for purchases made in 2017. Any qualified equipment installed prior to January 1, 2018, is eligible for this credit. Equipment installed on or after January 1, 2018, is not eligible for this credit.
This credit applies to energy efficiency improvements in the building envelope of existing homes and for the purchase of high-efficiency heating, cooling and water-heating equipment. Efficiency improvements or equipment must serve a dwelling in the United States that is owned and used by the taxpayer as a primary residence. The maximum tax credit for all improvements made in 2011 – 2016 is $500. The cap includes tax credits for any improvements made in any previous year. If a taxpayer claimed $500 or more of these tax credits in any previous year, any purchases made in 2011 – 2017 will be ineligible for a tax credit.
Building Envelope Improvements
Owners of existing homes may receive a tax credit worth 10% of the cost of upgrading the efficiency of the building’s envelope. Installation (labor) costs are not included and the credit is capped at $500 for all improvements. To be eligible for the credit, the improvement must meet the prescriptive requirements established for it under the 2009 International Energy Conservation Code (including supplements). The following improvements are eligible for the tax credit:
Insulation materials and systems designed to reduce a home’s heat loss or gain
Exterior doors and windows (including skylights) — no more than $200 in total credits can be claimed for windows in years 2006 – 2016 Equipment must meet version 6.0 Energy Star program requirements.
Pigmented metal roofs designed to reduce heat gain, and asphalt roofs with appropriate cooling granules, which are Energy Star certified.
Heating, Cooling and Water-Heating Equipment
Taxpayers who purchase qualified residential energy-efficient property may be eligible for a tax credit. The credit is equal to the full cost of the equipment up to the following caps:
Advanced main air circulating fan: $50
Natural gas, propane, or oil furnace or hot water boiler with an annual fuel utilization rate of 95 or greater: $150
Electric heat pump water heater with an energy factor of at least 2.0: $300
Electric heat pump which achieves the highest efficiency tier established by the Consortium for Energy Efficiency: $300
Central air conditioner which achieves the highest efficiency tier established by the Consortium for Energy Efficiency: $300
Natural gas, propane, or oil water heater which has either an energy factor of at least 0.82 or a thermal efficiency of at least 90 percent: $300
Biomass stoves that use “plant-derived fuel available on a renewable or recurring basis, including agricultural crops and trees, wood and wood waste and residues (including wood pellets), plants (including aquatic plants), grasses, residues, and fibers”. Systems must have a thermal efficiency rating of at least 75 percent to qualify: $300