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Claiming 2024 Tax Credits

General Information

Improvements made to your home in 2024 may qualify you for federal income tax credits, including the Energy Efficiency Home Improvement (25C), Residential Clean Energy (25D), and/or Alternative Fuel Vehicle Refueling Property (30C) tax credits. You and your tax professional can use this information to determine your eligibility and apply to receive these tax credits, which can lower your tax liability when you file your taxes in 2025. This information is also included in a ‘Tax Documents’ folder within Pearl App users’ profiles who received certifications in 2024.

How to claim your 2024 tax credits: 

General Information: 

Homeowners, and in some cases renters, are eligible for tax credits for certain energy efficiency expenditures placed in service during the tax year. In some cases, a taxpayer’s principal or main residence must be served by the system or audit in order to qualify for a tax credit. The residence can be a house, mobile home, cooperative apartment, condominium, a manufactured home that conforms to Federal Manufactured Home Construction and Safety Standards, or a houseboat. See Appendix A below for details.

Limits exist on the total dollars in tax credits available for a given installation or home improvement project, as well as on the total dollar amount in tax credits that can be claimed each year. For example, Energy Efficient Home Improvement (25C) tax credits have a total annual limit of $3,200. Within that total is a limit of: 

  • $2,000 for any combination of heat pumps, heat pump water heaters, and biomass stoves/boilers. 
  • $1,200 for any combination of doors ($250 per door and $500 total), windows ($600), insulation and air sealing ($1,200), energy audits ($150), and electrical panel updates ($600). 

Depending on the type of energy-efficiency improvements you made to your home, receipts may be required to verify their cost when you file your taxes.

Pearl’s Guidance and Recommendations: 

Work with your tax professional to complete and file IRS Form 5695 with your 2024 tax return to claim any eligible tax credits for energy-efficient home systems and other energy efficiency and energy production upgrades. For instructions on completing the form, visit this link. 

Pearl does not provide tax preparation services and does not guarantee that you qualify for these or other tax credits. Always consult a qualified tax professional or refer to official tax guidelines to ensure that you’re following the correct procedures for your specific tax situation. 

Please contact Pearl’s homeowner support team with any questions at help@pearlcertification.com. 

Appendix A: 

The list below is 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: Under 25D, tax credits are available for solar panel installations up to 30% of the project cost (uncapped), provided they are installed in conjunction with a dwelling unit located in the United States that is used as a residence by the taxpayer. Additionally, the solar panels must be owned or financed (not leased). Used (previously owned) solar panel equipment is not eligible for the tax credit. There is no income limit on this tax credit.

Home Batteries (Energy Storage): Energy storage systems with a capacity of 3 kWh or greater qualify for a Residential Clean Energy (25D) tax credit of up to 30% of the project cost (uncapped), if they are installed in connection with a taxpayer’s primary or secondary residence. The maximum allowable credit amount is available to all taxpayers, with no income limits.

Heat Pump Water Heaters: Heat pump water heaters qualify for an Energy Efficiency Home Improvement (25C) tax credit of up to 30% of the project cost (capped at $2,000), if they have earned ENERGY STAR® ratings. Each tax year, the credit is reset, making it available again for additional projects. Heat pump water heater tax credits are available to all taxpayers, regardless of income. 

Solar Water Heaters: Solar water heaters are eligible for a Residential Clean Energy (25D) tax credit of up to 30% of the project cost (uncapped), if at least half the property’s energy is derived from the sun. Solar water heaters must be certified by an entity endorsed by the state or the Solar Rating Certification Corporation. There is no income limit on this tax credit.

Windows: All exterior windows qualify for an Energy Efficiency Home Improvement (25C) tax credit if they meet the ENERGY STAR Most Efficient standard. The maximum credit of $600 is available to all taxpayers without income limits.

Insulation: Insulation qualifies for an Energy Efficiency Home Improvement (25C) tax credit if the product meets the International Energy Conservation Code (IECC) standards in effect at the start of the year two years prior to the installation. Additionally, the insulation must be qualified bulk insulation products such as batts, rolls, blow-in fibers, rigid boards, expanding spray, or pour-in-place. The maximum credit of $1,200 is available to all taxpayers, regardless of income.

Heating System: Under the Energy Efficiency Home Improvement (25C) tax credit, heating systems qualify for a tax credit of 30% of the project cost, up to a maximum of $600, if they achieve an annual fuel utilization efficiency (AFUE) of at least 97 and are ENERGY STAR rated. Heating system tax credits are available to all taxpayers, regardless of income.

Geothermal Heat Pump: Geothermal heat pumps (ground source heat pumps) qualify for a Residential Clean Energy (25D) tax credit of up to 30% of the project cost (uncapped), provided the equipment meets the requirements of the ENERGY STAR program in effect at the time of the expenditure. There is no income limit on this tax credit.

Air Source or Mini-Split Heat Pump: Air source and mini-split heat pumps qualify for an Energy Efficiency Home Improvement (25C) tax credit of 30% of project cost, up to a maximum of $2,000, if they have earned ENERGY STAR ratings at the time of install. Each tax year, the credit is reset, making it available again for additional projects. Regardless of income, all taxpayers are eligible for heat pump tax credits.

Air Sealing: Air sealing products qualify for an Energy Efficiency Home Improvement (25C) tax credit if they come with a Manufacturer’s Certification Statement, including, weather stripping, spray foam in a can designed to air seal, caulk designed to air seal, and house wrap. Air sealing materials must meet International Energy Conservation Code (IECC) standards in effect at the start of the year two years before installation. The maximum allowable credit of $1,200 is available to all taxpayers, with no income limits.

Energy Audit: Under the Energy Efficiency Home Improvement (25C) tax credit program, homeowners can receive a tax credit of up to 30% of the cost of a home energy audit, capped at $150. The home audited must be owned or used by the taxpayer as a principal residence. The home energy audit must identify the most significant and cost-effective energy-efficiency improvements with respect to the residence; include an estimate of the energy and cost savings with respect to each improvement; and be conducted and prepared by a certified home energy auditor. Regardless of income, all taxpayers are eligible for energy audit tax credits.

Note: The rules for Home Energy Audits performed after January 1, 2024 will include additional requirements. It is important to ensure your tax preparer understands that the rules for an eligible home energy audit performed prior to January 1, 2024 are less stringent than those for home energy audits performed thereafter. Your tax preparer may want to reference IRS guidance issued on August 4, 2023 to learn more.

Electric Vehicle Readiness: Under the Alternative Fuel Vehicle Refueling Property (30C) tax credit, qualified refueling properties are eligible for a tax credit of up to 30% of the cost, with a maximum allowable credit of $30,000 for depreciable property and $1,000 for all other property. Census tract limits apply for qualifying fueling equipment locations. These include tracts where the poverty rate is at least 20%, tracts that are not urban areas, and metropolitan and non-metropolitan area tracts where the median family income is less than 80% of the state median family income level. For a refueling property to qualify, it should charge two- and three-wheeled vehicles for use on public roads and have bidirectional (vehicle-to-grid or V2g) capabilities. Use IRS Form 8911 to calculate and report your credit for alternative fuel vehicle refueling properties placed in service during 2024.

Doors: All exterior doors qualify for an Energy Efficiency Home Improvement (25C) tax credit of 30% of project cost, up to a maximum of $500 ($250 per door), if they are ENERGY STAR rated. The maximum credit of $500 is available to all taxpayers without income limits.

Biomass Stove/Boiler: Biomass stoves and boilers qualify for an Energy Efficiency Home Improvement (25C) tax credit of 30% of the project cost, up to a maximum of $2,000, if the system has a thermal efficiency rating of at least 75%. There is no income limit on this tax credit.

Electrical Panel: The Energy Efficiency Home Improvement (25C) tax credit can be claimed for electrical panel upgrades if they are installed in accordance with the National Electric Code, have a load capacity of at least 200 amps, and are installed in conjunction with and enabling the installation and use of qualified energy-efficiency improvements or properties. A tax credit is 30% of the project cost, capped at $600, is available to every taxpayer, regardless of income.