{"id":20305,"date":"2022-08-15T12:49:43","date_gmt":"2022-08-15T19:49:43","guid":{"rendered":"https:\/\/evergreensmallbusiness.com\/?p=20305"},"modified":"2022-12-27T12:19:05","modified_gmt":"2022-12-27T20:19:05","slug":"inflation-reduction-act-tax-credits-for-homeowners","status":"publish","type":"post","link":"https:\/\/evergreensmallbusiness.com\/inflation-reduction-act-tax-credits-for-homeowners\/","title":{"rendered":"Inflation Reduction Act: Tax Credits for Homeowners"},"content":{"rendered":"

August 19th update:<\/strong> It has come to my attention that the original Example 3 was not clearly supported by the statute. This has been fixed and I apologize for the error.<\/em><\/p>\n

December 27th update:<\/strong><\/em> On December 22nd, the IRS published a helpful FAQ available here<\/a>, which among other things clarified that the $2,000 credit for heat pumps is in addition to the $1,200 credit for building envelope improvements, for a maximum possible credit of $3,200. Huzzah!<\/em><\/p>\n

On Friday, the House passed the Inflation Reduction Act; it now goes to President Biden for his signature. There are three new tax credits in this law every homeowner should know about: the Energy Efficient Home Improvement Credit<\/strong>, the Residential Clean Energy Credit<\/strong>, and the Alternative Fuel Vehicle Refueling Property Credit<\/strong> (for electric vehicle chargers).<\/p>\n

Note:<\/strong> These credits are nonrefundable\u2014in other words, you need to have at least $500 of tax liability to claim a $500 credit.<\/p>\n

The Energy Efficient Home Improvement Credit (IRC \u00a7 25C)<\/h2>\n

Section 13301 of the Inflation Reduction Act rebrands the Nonbusiness Energy Property credit as the \u201cEnergy Efficient Home Improvement Credit.\u201d The bill extends the credit to December 31, 2032, and significantly expands the credit to be more generous. These new rules apply to property placed in service after December 31, 2022.<\/p>\n

What qualifies for the tax credit?<\/h3>\n

In general, the credit is equal to 30% of what you spent on qualified energy efficiency improvements<\/strong>, residential energy property<\/strong>, and home energy audits<\/strong>\u00a0during the year (though there are annual limits, which I describe later).<\/p>\n

Qualified energy efficiency improvements<\/h4>\n

\"Foam<\/a>Qualified energy efficiency improvements are building envelope improvements. This includes insulation, energy-efficient windows, and energy-efficient exterior doors.<\/p>\n

To qualify for the credit, these improvements to the building envelope need to meet certain criteria:<\/p>\n