You may have heard that last year the Residential Energy Efficiency Tax Credits were extended through 2032. But what about taxes for 2022? What kind of tax credits and deductions can homeowners get for improvements that were made last year?
Since things have changed between this year and last year, tax season could get confusing if you made energy efficiency improvements or upgrades to your home. Check out this comprehensive overview for details on energy efficiency credits and deductions for 2022.
Energy Efficient Home Improvement Credit
The Energy Efficient Home Improvement Credit, a.k.a. the nonbusiness energy property tax credit, lowers the cost of a wide range of house projects that improve efficiency.
Who Can Claim the Energy Efficient Home Improvement Tax Credits
The credits are available to homeowners for their primary residence only. It must also be an existing home. New homes and commercial residential buildings can get tax credits through the Inflation Reduction Act of 2022.
Energy Efficient Home Improvement Tax Credit Amount
You can receive a 10% tax credit of up to $500 on your 2022 taxes. Some improvements have a specific tax credit amount that ranges from $50 to $300.
Qualifying Home Improvements and Upgrades
If the following energy efficiency improvements were made on or before December 31, 2022 they qualify for a tax credit:
- ENERGY STAR heat pumps
- AC systems that are SEER 14 or higher
- ENERGY STAR gas-powered boilers
- Gas-powered furnaces
- Gas-powered water heaters
- Heat pumps
- Metal or asphalt roofing with coating to lower heat gain
- Windows and skylights
The product cost is covered by the credit, however, installation cost is included only for heat pumps, AC systems, boilers, furnaces and water heaters.
A Word About Windows
Windows are treated a little differently. There is a max credit of $200, and the windows must be ENERGY STAR certified. The good news is even if you create a new window opening that window will qualify for the tax credit.
Residential Clean Energy Property Credit
The Residential Clean Energy Property Credit, also known as the Renewable Energy Tax Credit or the residential solar energy credit, is a separate tax incentive program that helps lower the cost of installing equipment that helps generate power.
Who Can Claim the Residential Clean Energy Property Tax Credits
The Residential Clean Energy Property Credit can be claimed on a property owner’s primary residence, second home or a new build.
Residential Clean Energy Property Tax Credit Amount
This one may be a bit confusing because the amount changed in 2022 for the year. You can receive a 30% tax credit on your 2022 taxes for the cost of installing larger systems like solar panels, fuel cells or a wind turbine if they were installed after December 31, 2021. Systems that were put into place between December 31, 2019 and December 31, 2021 are eligible for a 26% tax credit.
Qualifying Home Improvements and Upgrades
The home improvements and upgrades below qualify for the 2022 Residential Clean Energy Property Credit:
- Solar panel systems (does not include battery storage for 2022)
- Fuel cells
- Residential wind turbines
- Geothermal heat pumps (must be ENERGY STAR requirements)
- Solar water heaters
- Biomass fuel stoves (75% or higher thermal efficiency rating)
- Home electric vehicle charger (up to $1,000)
The tax credits for fuel cells and wind turbines are based on the amount of energy they generate. For example, wind turbines must produce less than 100 kilowatts of electricity to qualify.
Maximize the savings! Find out if you qualify for additional state energy efficiency tax credits.
Energy Efficiency Tax Credits for 2023
Remember, starting in 2023 the energy efficiency tax credits and deductions are even bigger. Also, more home improvements will qualify for a 30% tax credit of up to $3,200 a year. Start planning your energy efficiency projects now!
Another way you can improve your energy use is making the switch to a Verde Energy plan. Our green energy plans are a way to clean up electricity use without an upfront investment. Check to see which Verde Energy electricity plans are available in your area.