The Inflation Reduction Act of 2022 provides significant increases in the energy-efficient home improvement credit beginning in 2023 through 2032. This credit now covers additional expenses and may be worth up to $1,200 each year, which replaces the former $500 lifetime limit, even if you claimed it in the past.
The credit is equal to the lesser of 30% of the sum of the amounts paid for qualifying home improvements or the annual $1,200 credit limit. The annual dollar credit limit applies to specific items such as:
• Home energy audits: $150 annual limit
• Exterior doors: $250 per door (up to $500 per year)
• Exterior windows and skylights, central air conditioning units, electric panels and related equipment, natural gas, propane and oil water heaters, or furnaces: $600 annual limit
• Insulation materials or systems, and air sealing materials or systems are limited to 30% of costs
• Eligible heat pumps and biomass stoves and boilers are limited to 30% of costs, including labor, for a maximum yearly credit of $2,000 (this is separate from the $1,200 limit)
Not every item qualifies for the credit. Visit Energy Star's Tax Credits for Homeowners resource page for requirement details and the IRS website: Frequently asked questions about energy-efficient home improvements and residential clean energy property credits to learn more about what items qualify for the credit.