Energy Efficient Home Improvement 25C Tax Credit for Lower HVAC Costs
Heard about the Inflation Reduction Act (IRA) but aren’t sure how it helps increase energy efficiency in your home? Don’t worry – we’ve got the info you need to understand how the IRA benefits you and your home HVAC system.
For more detailed information, we also recommend you connect with a tax specialist to learn more about how the 25C tax credit can benefit you. As of the date of publication, the government has yet to release the 2023 forms, so please keep this in mind when considering your application.
What is the Inflation Reduction Act?
The IRA was passed to reduce inflation by extending some tax credits and adding other ones. The section 25C tax credit of the IRA provides a great incentive for those who want to upgrade their existing equipment with appliances designed to minimize their carbon footprint and reduce energy costs.
The Act aims to address the federal deficit and lower inflation. The $740 billion legislation was signed into law in August 2022 and covers a wide range of climate and healthcare issues. One focus of the bill is on green energy upgrades that can be claimed on the tax credits 25C section of the IRA.
Who is eligible for the IRA Energy Efficiency 25C Tax Credit?
Anyone who installs eligible energy-efficient measures in their home in the year 2023 and beyond is eligible to claim the tax credits included in the IRA through the end of 2032.
Additionally, for the home to qualify, it must meet the following criteria:
- You must own the home.
- The home must be your primary residence.
- You must owe taxes in the year you apply for the Inflation Reduction Act Energy Efficiency 25C Tax Credit.
How much can I expect to save with 25C Tax credits?
The 25C tax credit allows you to claim up to 30% of the costs for most energy efficiency improvements with an annual limit of $3,200 total. How much you benefit will depend on what eligible improvements you make each year.
Qualifying Home Energy Upgrades for 25C Tax Credits
The 25C tax credit allows you to claim up to 30% of the costs for most energy efficiency improvements with an annual limit of $3,200 total. How much you benefit will depend on what eligible improvements you make each year. Several upgrades qualify for the 25C energy efficiency tax credit. Here are some of the eligible systems and how much you can save.
Environmental Benefits of Home Improvement Tax Credit (25C)
There are several environmental benefits to upgrading your home with equipment that allows you to take advantage of the tax savings. When homeowners switch to electric power, it reduces the amount of carbon dioxide they emit into the air, helping to lessen their impact on climate change.
The Inflation Reduction Act Energy Efficiency 25C tax credit intends to help families make these transitions. If you need help navigating what changes you can make and what systems are eligible for the tax credit, feel free to give American Home Water & Air a call for an appointment to review your current systems and discuss what changes you can make for the maximum benefit to your home, savings and the environment.
Faucet Replacement & Repair Services FAQs
You can use Form 5695 to determine the residential energy efficiency property credit and the nonbusiness energy property credit amounts you can get. You can find more information about these forms on the IRS website.
While energy-efficient upgrades purchased in 2022 won’t qualify for the new IRA tax credits, there are other tax credits that you may be able to take advantage of; check the Energy Star website for details.
Unfortunately, the 25C tax credit only applies to existing homes that are being upgraded for energy efficiency. But if you’re building a new home, you may still be eligible for other credits; check the Energy Star website for more information.
There are three separate energy efficiency programs offered under the IRA legislation. Each program has unique incentives, including rebates that will become available once the government finalizes them.
You can claim up to $1,200 in 25C tax credits per year with an additional $2,000 limit for certain appliances for a total of $3,200 maximum.
All components claimed on the 25C tax credits must be expected to be in place for a minimum of five years.
