Energy Star Tax Credits

Are There Tax Credits for Energy Efficient Upgrades?
Author: Denise Minor-Hoes

It's tax season and while this may not be the happiest time of year for you, there is some good news—the federal tax credits for energy efficiency were extended as part of the Consolidated Appropriations Act of 2021. If you made any qualifying home improvements to your primary residence since December 31, 2017, or plan to in 2021, you are eligible to claim them on your taxes for those years.

Energy Efficient Upgrades That Qualify for Tax Credits

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Looking for the ENERGY STAR label makes it easy to identify products for your home that save energy, save money, and help protect the climate. Here are the highlights of ENERGY STAR certified equipment that is eligible for tax credits:

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ENERGY STAR Products That Qualify for Federal Tax Credits:

• Central air conditioning – ENERGY STAR Most Efficient units qualify for a $300 tax credit.
• Air-source heat pumps – ENERGY STAR certified heat pumps qualify for a $300 tax credit.
• Gas, propane, or oil boilers – ENERGY STAR Most Efficient models qualify for a $150 tax credit (including installation).
• Natural gas, propane, or oil furnace – ENERGY STAR certified models qualify for a $150 tax credit.
• Advanced main air circulating fans – Must use no more than 2% of your furnace’s energy to qualify for a $50 credit.
• Biomass stoves – Must have a thermal efficiency rating of at least 75% to qualify for a $200 credit.
• Water heaters (non-solar) – ENERGY STAR certified heat-pump water heaters (EF of 2.2+) and certain gas, oil, and propane models qualify for a $300 tax credit.

Home Improvements That Qualify for Federal Tax Credits

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Your home’s envelope includes the outer walls, windows, doors, and other openings. Upgrading your home’s envelope can improve efficiency and qualify for the following tax credits:

• Windows, Doors, and Skylights – Earn a 10% tax credit (not including installation) up to $200 for windows/skylights and $500 for doors.
• Roofs (Metal and Asphalt) – ENERGY STAR qualified roofs with cooling granules/pigmented coatings qualify for 10% credit up to $500.
• Insulation – Batts, rolls, blow-in fibers, rigid boards, spray, and pour-in-place insulation can qualify for 10% credit up to $500 (excluding installation).
• Air sealing products – Must have a Manufacturer’s Certification Statement. Examples include:
  • Weather stripping
  • Spray foam in a can
  • Caulk for air sealing
  • House wrap

How to Apply for the Federal Tax Credits for Energy Efficient Upgrades

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Use IRS Form 5695: Residential Energy Credits to apply for these credits. If you have questions, consult your tax preparer or contact the IRS.

The Renewable Energy tax credits have also been extended and are available through the end of 2023. These credits include:

• Geothermal Heat Pumps
• Residential Wind Turbines
• Solar Energy Systems
• Fuel Cells

For more information, visit ENERGY STAR’s page on Federal Tax Credits.

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