Make Sure You Get These Federal Energy Tax Credits
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Part of the huge Bipartisan Budget Act passed last month was an extension of tax credits for energy-efficient upgrades to your home.
That means if you made any qualifying home improvements in 2017, such as replacing doors and windows, you can claim them on your taxes this year using IRS Form 5695: Residential Energy Credits (PDF).
Here are the home improvements that qualify, as well as how much you can save for each. (Note that unless otherwise indicated only improvements to your primary residence qualify.)
Upgrades That Qualify for Tax Credits
Windows, Doors, and Skylights
If you replaced any windows, doors, or skylights—or installed new ones that meet Energy Star standards—you are eligible for a tax credit. You don’t have to replace all your windows and doors to qualify, and you can claim the credit if you installed a window or door where there wasn’t one before.
Tax credit: 10 percent of the cost, up to $200 for windows and skylights and up to $500 for doors. Does not include installation.
Roofs (Metal and Asphalt)
Roofing materials that meet Energy Star requirements reflect more of the sun’s rays and can lower roof surface temperatures by up to 100° F. Qualifying roofing materials include metal roofs with appropriate pigmented coatings and asphalt roofs with appropriate cooling granules.
Tax credit: 10 percent of the cost, not including installation, up to $500.
Water Heaters (Nonsolar)
Water heating can account for up to 25 percent of the energy used in your home. Qualifying water heaters include gas, oil, and propane units with an energy factor (overall efficiency) of 0.82 or more, or a thermal efficiency of at least 90 percent. Electric heat-pump water heaters with an energy factor of 2.0 or more also qualify.
Tax credit: $300.
Insulation
Typical bulk insulation products—such as batts, rolls, blow-in fibers, rigid boards, expanding spray, and pour-in-place—can qualify for a tax credit, according to Energy Star. Products that reduce air leaks, including weather stripping, spray foam in a can, caulk, and house wrap, can also qualify, as long as they come with a Manufacturer’s Certification Statement.
Tax credit: 10 percent of the cost, up to $500. Does not include installation, but you can install the insulation/home sealing yourself and get the credit.
Biomass Stoves
To heat a home or water, biomass stoves burn wood and wood waste and residues (including wood pellets), agricultural crops and trees, plants (including aquatic plants), grasses, residues, and fibers. To qualify, stoves must have a thermal efficiency rating of at least 75 percent and meet 2020 clean-air standards from the Environmental Protection Agency.
Tax credit: $300.
Heating, Ventilation, and Air Conditioning
Some heating, ventilation, and air-conditioning equipment qualifies for an energy tax credit. For full details see the Energy Star website. Here are the improvements:
• Central air conditioning, $300 tax credit
• Air-source heat pumps, $300 tax credit
• Gas, propane, or oil boiler, $150 tax credit, including installation costs
• Natural gas, propane, or oil furnace, $150 tax credit
Geothermal Heat Pumps
Geothermal heat pumps are similar to ordinary heat pumps, but they use the ground temperature instead of outside air to provide heating, air conditioning, and, in most cases, hot water. Because they use the Earth’s natural heat, they are among the most efficient and comfortable heating and cooling technologies currently available.
Tax credit: 30 percent of cost, with no upper limit. (Second homes qualify.)
Residential Wind Turbines
A wind turbine harnesses energy from the wind and converts it to electricity compatible with your home’s electrical system.
Tax credit: 30 percent of cost, with no upper limit. (Second homes qualify.)
For 2018 and Beyond
Under the Bipartisan Budget Act, the renewable energy tax credits for solar energy systems, fuel cells, small wind turbines, and geothermal heat pumps now feature a gradual step-down in the credit value. Existing homes and new construction qualify, as do principal and second homes.
Tax credit:
• 30 percent for systems placed in service by Dec. 31, 2019
• 26 percent for systems placed in service after Dec. 31, 2019, and before Jan. 1, 2021
• 22 percent for systems placed in service after Dec. 31, 2020, and before Jan. 1, 2022
How to Claim Your Tax Credit
You’ll need to file IRS Form 5695 (PDF) with your 2017 taxes. Be sure to keep a copy of the Manufacturer’s Certification Statement and any receipts or itemized bills. Check the Energy Star website for more details.
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