Formerly the Nonbusiness Energy Property Credit, now the Energy Efficient Home Improvement Credit
Previously was 10%, now is 30%
Section 25(C)(a)In the case of an individual, there shall be allowed as a credit against tax for the tax year an amount equal to 30% of the sum of
(1) the amount paid or incurred by the taxpayer for qualified energy efficiency improvements installed during such tax year,
(2) the amount of the residential energy property expenditures paid or incurred by the taxpayer during such tax year,
(3) and the amount paid or incurred by the taxpayer during the tax year for home energy audits.
Section 25(C)(b)(1) Previously the limit was $500 for all prior tax years after 2005. Now the credit for any taxable year is limited to $1,200.
Section 25(C)(b)(2) Energy property – the credit allowed by reason of subsection (a)(2) shall not exceed with respect to any item of qualified energy property, $600.
Section 25(C)(b)(3) Windows – the credit allowed by reason of subsection (a)(1) for any taxable years shall not exceed, in the aggregate with respect to all exterior windows and skylights, $600.
Section 25(C)(b)(4) Doors – the credit allowed under this section by reason of subsection (a)(1) for any taxable year shall not exceed (A) $250 in the case of any exterior door, and (B) $500 in the aggregate with respect to all exterior doors.
Section 25(C)(b)(5) Heat pump and heat pump water heaters, biomass stoves and boilers – Despite paragraphs 1 and 2, the credit allowed under this section by reason of subsection (a)(2) for any tax year shall not, in the aggregate, exceed $2,000 with respect to amounts paid or incurred for property described in clauses (i) and (ii) of subsection (d)(2)(A) and in subsection (d)(2)(B).
(c)(1) The term “qualified energy efficiency improvements” means any energy efficient building envelope component, if –
(A) such component is installed in or on a dwelling unit located in the US and owned and used by the taxpayer as the taxpayer’s principal residence (meaning of section 121),
(B) the original use of such component commences with the taxpayer, and
(C) such component reasonably can be expected to remain in use for at least 5 years.
(c)(2) The term “energy efficient building envelope component” means a building envelope component which meets –
(A) in the case of an exterior window or skylight, Energy Star most efficient certification requirements,
(B) in the case of an exterior door, applicable Energy Star requirements, and
(C) in the case of any other component, the prescriptive criteria for such component established by the most recent International Energy Conservation Code standard in effect as of the beginning of the calendar year which is 2 years prior to the year in which such component is placed in service.
(c)(3) The term “building envelope component” means
(A) any insulation material or system, including air sealing material or system, which is specifically and primarily designed to reduce the heat loss or gain of a dwelling unit when installed in or on such dwelling unit,
(B) exterior windows including skylights, and
(C) exterior doors.
(d)(1) The term “residential energy property expenditures” means expenditures made by the taxpayer for qualified energy property which is –
(A) installed on or in connection with a dwelling unit located in the US and used as a residence, and
(B) originally placed in service by the taxpayer.
Such term includes expenditures for labor costs properly allocable to the onsite preparation, assembly, or original installation of the property.
(d)(2) The term “qualified energy property” means any of the following:
(A) Any of the following which meet or exceed the highest efficiency tier (not including any advanced tier) established by the Consortium for Energy Efficiency which is in effect as of the beginning of the calendar year in which the property is placed in service:
(i) An electric or natural gas heat pump water heater
(ii) An electric or natural gas heat pump
(iii) A central air conditioner
(iv) A natural gas, propane, or oil water heater
(v) A natural gas, propane, or oil furnace or hot water boiler.
(B) A biomass stove or boiler which
(i) uses the burning of biomass fuel to heat a dwelling unit located in the US and used as a residence by the taxpayer, or to heat water for use in such a dwelling unit, and
(ii) has a thermal efficiency rating of at least 75%
(C) Any oil furnace or hot water boiler which
(i) is placed in service after Dec 31, 2022 and before Jan 1, 2027 and
(I) meets or exceeds 2021 Energy Star efficiency criteria, and
(II) is rated by the manufacturer for use with fuel blends at least 20% of the volume of which consists of an eligible fuel, or
(ii) is placed in service after Dec 31, 2026 and
(2) achieves an annual fuel utilization efficiency rate of not less than 90, and is rated by the manufacturer for use with fuel blends at least 50% of the volume of which consists of an eligible fuel.
(D) Any improvement to, or replaced of, a panelboard, sub-panelboard, branch circuits, or feeders which
(i) is installed in a manner consistent with the National Electric Code
(ii) has a load capacity of not less than 200 amps
(iii) is installed in conjunction with
(iii)(I) any qualified energy efficiency improvements, or
(iii)(II)any qualified energy property described in subparagraphs (A) through (C) for which a credit is allowed under this section for expenditures with respect to such property, and
(iv) enables the installation and use of any property described in subclause (I) or (II) of clause (iii).
(h) Product Identification Number Requirement.
(h)(1) No credit shall be allowed under subsection (a) with respect to any item of specified property placed in service after Dec 31, 2024 unless
(A) such item is produced by a qualified manufacturer, and
(B) the taxpayer includes the qualified product identification number of such item on the return of tax for the taxable year.
(i) Termination, this section shall not apply with respect to any property placed in service
(1) after Dec 31, 2007 before Jan 1, 2009, or
(2) after Dec 31, 2032.