Making energy efficient improvements to your primary residence — or main home — is good for the environment, but these improvements may also be good for your pockets. You might qualify for up to $3,200 in tax credits when you make an improvement that qualifies for the credit after January 1, 2023. To qualify, the home must be in the United States, and it must be an existing home, not a new home build. You can claim the maximum annual amount each year that you make an improvement until 2033.

Energy Audit

Consider getting a home energy audit to get a better idea of which energy improvement might benefit your home. A home energy audit on your primary residence may qualify for up to $150 tax credit. An energy audit is like a health inspection for your home. It will reveal how well the home uses energy or if it is wasting energy, which can cost you more money in the long run.

Beginning January 1, 2024, home energy audits must be performed by a Qualified Home Energy Auditor or by someone working under the supervision of a Qualified Home Energy Auditor. The person must be certified by a Qualified Certification Program. Inquire more about an energy checkup through Alabama Power by visiting https://www.alabamapower.com/residential/save-money-and-energy/energy-saving-programs.html.

Energy Improvements and Components

Some home components that qualify for the tax credit include the following:

• For exterior doors only, $250 per door and $500 total
• For exterior windows and skylights, up to $600 total
• For insulation and air sealing materials or systems, up to $1,200

There are some restrictions, such as meeting Energy Star requirements or whether you use more than 20 percent of the home for business purposes. To see all eligibility requirements and rules visit the Internal Revenue Service (IRS) website https://www.irs.gov/credits-deductions/energy-efficient-home-improvement-credit or speak with a tax preparation professional.

Some in-home systems that meet the Consortium for Energy Efficiency (CEE) highest efficiency tier, may also qualify for a tax credit.

These systems may qualify for credit up to $600:

• Central air conditioners
• Natural gas, propane, or oil water heaters
• Natural gas, propane, or oil furnaces and hot water boilers

These systems may qualify for credit up to $2,000:

• Electric or natural gas heat pumps
• Electric or natural gas heat pump water heaters
• Biomass stoves and boilers

More Information

For more information on energy credits visit: https://www.irs.gov/credits-deductions/energy-efficient-home-improvement-credit