Federal tax credits for energy efficient and clean energy improvements are a fantastic way to save even more with the important improvements you’ve made to your home. Below is guidance on how to claim your 2022 tax credits and what equipment and installations qualify.
How to claim your 2022 tax credits:
Work with your tax professional to complete IRS Form 5695 as part of your 2022 tax return to claim any eligible tax credits for energy efficient improvements to your home and/or your 2022-installed solar system or energy storage system. IRS instructions on how to complete the form can be found here.
Please check out more information on the 2022 Energy Efficient Home Improvement Credit (25C) and the Residential Clean Energy Property Credit (25D) here:
- How to Take Advantage of 2022 Energy Efficiency & Renewable Energy Tax Credits
- IRS Information on Tax Credits
How much are the 2022 Energy Efficiency Home Improvement & Residential Clean Energy Tax Credits?
Energy Efficiency Home Improvement credit:
The Energy Efficiency Home Improvement credit allows you to take a credit of 10% of the amount you paid in 2022 for any qualified energy efficiency improvements and residential energy property placed in service in 2022. This credit is limited in few respects as outlined below and sourced from the 2022 IRS instructions for form 5695.
- A total combined credit limit of $500 for all tax years after 2005.
- A combined credit limit of $200 for windows for all tax years after 2005.
- A credit limit for residential energy property costs for 2022 of $50 for any advanced main air circulating fan; $150 for any qualified natural gas, propane, or oil furnace or hot water boiler; and $300 for any item of energy efficient building property.
Residential Clean Energy credit:
The Residential Clean Energy credit allows you to take a credit of 30% of the amount you paid for any qualified clean energy property placed in service in 2022. This does include a limit of $500 for each one-half kilowatt of capacity for any fuel cell property placed in service in 2022.
It is important to note that qualifying systems must be installed and operating in 2022 to take this credit. For example, a solar PV system must be installed, connected, and producing energy in 2022 to qualify.
What home improvements qualify for these tax credits?
The list below provides a summary of the qualifications provided by the IRS to claim a tax credit for each installation type. These details, like any federal tax policy, are subject to change by the IRS.
- Solar Panels: Solar panels qualify for a 25D tax credit if they are owned or financed (not leased). Solar panels do not need to be installed in connection with the tax payer’s principal residence.
- Home Batteries (Energy Storage): Energy storage systems qualify for a 25D tax credit if they are installed in connection with the tax payer’s principal residence and 100% of the energy used by the systems comes from the sun.
- Water Heaters: Water heaters qualify for a 25C tax credit if they are electric heat pump with a Uniform Energy Factor (UEF) greater than or equal to 2.2 OR are gas, oil, or propane fueled with a Uniform Energy Factor (UEF) greater than or equal to 0.82 or a thermal efficiency of at least 90%.
- Solar Water Heaters: Solar water heaters qualify for a 25D tax credit if at least half of the energy used by such property for such purpose is derived from the sun.
- Windows: Windows qualify for a 25C tax credit if they meet or exceed version 6.0 of the ENERGY STAR® program requirements.
- Insulation: Insulation qualifies for a 25C tax credit if the overall r-value of installed insulation meets 2009 International Energy Conservation Code (IECC) standards outlined in Table 402.1.1.
- Heating System: Heating systems qualify for a 25C tax credit if they achieve an annual fuel utilization efficiency (AFUE) of at least 95.
- Geothermal Heat Pump: Geothermal heat pumps (ground source heat pumps) qualify for a 25D tax credit if they meet the requirements of the ENERGY STAR program in effect at the time of the expenditure.
- Air Source or Mini-Split Heat pump: Air source & mini-split heat pumps qualify for a 25C tax credit if they meet the highest efficiency tier established by the Consortium for Energy Efficiency (CEE) as in effect on Jan. 1, 2009.
- Cooling System: Cooling systems qualify for a 25C tax credit if they meet the highest efficiency tier established by the Consortium for Energy Efficiency (CEE) as in effect on Jan. 1, 2009.
- Air Sealing: Air sealing products qualify for a 25C tax credit if they come with a Manufacturer’s Certification Statement.
Pearl Certification does not provide tax preparation services and does not guarantee that you qualify for these or other tax credits. Please consult a qualified tax professional.
Please feel free to reach out to Pearl Certification’s homeowner support team with any questions at email@example.com.
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