How to Apply the Federal Tax Credits for Energy Efficient Upgrades
In order to apply any qualifying tax credits on your 2022 tax return, you’ll want to download and complete the 2022 version of this worksheet provided by the IRS: IRS Form 5695: Residential Energy Credits. If you have questions during this process, contact your tax preparer or the Internal Revenue Service (IRS) for more information.
What’s New for Federal Tax Credits in 2023?
There will be new efficiency tax credits in place starting January 1, 2023, lasting 10 years – through 2032. While the tax credit amount is mostly limited to 30% of the project cost, the previous lifetime cap of $500 has been changed to an annual cap of either $1,200 to $2,000 depending on the efficiency improvements you make. This means you will be able to claim credit for more projects, especially if they are spread out over multiple years.
These Energy Efficiency Home Improvement credits will be applicable to products such as:
- Heat Pump Water Heaters
- Heat Pumps
- Biomass Stove/Boilers
- Exterior Doors
- Central Air Conditioners
- Natural Gas, Oil, Propane Water Heaters
- Natural Gas, Oil, Propane Furnaces/Boilers
- Electric Panel Upgrades
- Home Energy Audits
For more information and to stay up to date on available tax credits, make sure to bookmark ENERGY STAR’s page on Federal Tax Credits so you can maximize savings on your home energy efficiency projects.