Types of Energy Tax Credits for Homeowners

Each type of tax credit focuses on different aspects of energy efficiency and renewable energy adoption.

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Understanding these different credits will help you identify which ones you may qualify for and how they can benefit you financially. Let's explore the various types of energy tax credits for homeowners:

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Renewable Energy Tax Credits

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Renewable energy tax credits are designed to promote the use of renewable energy sources in residential properties.

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These credits incentivize homeowners to invest in renewable energy technologies such as

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• Rooftop solar panels
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• Wind turbines
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• Geothermal systems

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By harnessing clean and sustainable energy, homeowners can reduce their reliance on traditional energy sources and contribute to a greener future.

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Energy Efficiency Tax Credits

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Energy efficiency tax credits focus on encouraging homeowners to make energy-efficient improvements to their homes.

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These credits incentivize the upgrade of appliances like:

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• HVAC systems - heat pumps, etc.
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• Insulation
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• Windows
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• Doors
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• And other components that improve the overall energy efficiency of a property.

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By making these upgrades, homeowners can reduce their energy consumption, lower utility bills, and minimize their environmental impact.

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How do I file for the Residential Energy Tax Credits?

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File Form 5695, Residential Energy Credits to obtain them. You must have taxable income in order to receive the tax credit, which is a dollar-to-dollar offset.

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Electric Vehicle & EV Charger Tax Credits

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Read our in depth article on EV tax credits here

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With the increasing popularity of electric vehicles (EVs), the government offers tax credits to homeowners who purchase eligible EVs. Read more about them on the IRS website here.

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These credits aim to promote the adoption of electric vehicles as a means to reduce greenhouse gas emissions and dependence on fossil fuels.

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By purchasing an electric vehicle, homeowners can not only benefit from the tax credit but also enjoy long-term savings on fuel costs and contribute to cleaner air quality.

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Who qualifies for EV tax credits?

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You may qualify for a credit up to $7,500 under Internal Revenue Code Section 30D if you buy a new, qualified plug-in EV or fuel cell electric vehicle (FCV). The Inflation Reduction Act of 2022 changed the rules for this credit for vehicles purchased from 2023 to 2032.

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The credit is available to individuals and their businesses.

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To qualify, you must:

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• Buy it for your own use, not for resale
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• Use it primarily in the U.S.

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In addition, your modified adjusted gross income (AGI) may not exceed:

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• $300,000 for married couples filing jointly
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• $225,000 for heads of households
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• $150,000 for all other filers

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You can use your modified AGI from the year you take delivery of the vehicle or the year before, whichever is less. If your modified AGI is below the threshold in 1 of the two years, you can claim the credit.

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The credit is nonrefundable, so you can't get back more on the credit than you owe in taxes. You can't apply any excess credit to future tax years.

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What is the credit amount for EVs?

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The amount of the credit depends on when you placed the vehicle in service (took delivery), regardless of purchase date.

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For vehicles placed in service January 1 to April 17, 2023:

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• $2,500 base amount
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• Plus $417 for a vehicle with at least 7 kilowatt hours of battery capacity
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• Plus $417 for each kilowatt hour of battery capacity beyond 5 kilowatt hours
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• Up to $7,500 total

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In general, the minimum credit will be $3,751 ($2,500 + 3 times $417), the credit amount for a vehicle with the minimum 7 kilowatt hours of battery capacity.

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For vehicles placed in service April 18, 2023 and after:

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Vehicles will have to meet all of the same criteria listed above, plus meet new critical mineral and battery component requirements for a credit up to:

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• $3,750 if the vehicle meets the critical minerals requirement only
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• $3,750 if the vehicle meets the battery components requirement only
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• $7,500 if the vehicle meets both

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A vehicle that doesn't meet either requirement will not be eligible for a credit.

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Which EVs qualify for the tax credits?

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To qualify, an electric vehicle must:

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• Have a battery capacity of at least 7 kilowatt hours
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• Have a gross vehicle weight rating of less than 14,000 pounds
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• Be made by a qualified manufacturer.
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• FCVs do not need to be made by a qualified manufacturer to be eligible. See Rev. Proc. 2022-42 for more detailed guidance.
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• Undergo final assembly in North America
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• Meet critical mineral and battery component requirements (as of April 18, 2023).

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The sale qualifies only if:

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• You buy the vehicle new
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• The seller reports required information to you at the time of sale and to the IRS.
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• Sellers are required to report your name and taxpayer identification number to the IRS for you to be eligible to claim the credit.
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In addition, the vehicle's manufacturer suggested retail price (MSRP) can't exceed:

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• $80,000 for vans, sport utility vehicles and pickup trucks
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• $55,000 for other vehicles

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MSRP is the retail price of the automobile suggested by the manufacturer, including manufacturer installed options, accessories and trim but excluding destination fees. It isn't necessarily the price you pay.

You can find your vehicle's weight, battery capacity, final assembly location (listed as “final assembly point”) and VIN on the vehicle's window sticker.

Click the button below to see if a vehicle is eligible for the new clean vehicle credit.

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It's important to note that the availability and specifics of these tax credits may vary depending on your location and the current tax laws.

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Therefore, it's crucial to consult with a tax professional or refer to official government resources to determine the exact eligibility and requirements for each type of energy tax credit.