Energy Efficiency Tax Incentives
The Inflation Reduction Act (H.R. 5376) includes provisions designed to reduce greenhouse gas (GHG) emissions. Enacted in 2022, the bill made billions of dollars in incentives available to encourage investment in energy conservation and renewable energy sources.
Property owners and builders of new and upgraded homes and commercial buildings may claim clean electricity and energy efficiency tax credits and deductions for eligible purchases and improvements.
See if you may qualify and learn how to apply below.
Residential Energy Efficiency Tax Incentives
Available to homeowners for improvements made to an existing primary residence between January 1, 2023, and December 31, 2032. Reduced credits are available in 2033 and 2034.
- Credit equal to 30% of the cost of energy efficiency improvements (not including labor).
- Up to $1,200 per year. No lifetime limit.
- Credit caps:
- $1,200 for improvements to the building envelope that meet International Energy Conservation Code (IECC) standards, found in section R402 Building Thermal Envelope.
- $600 for windows and $500 for doors that meet ENERGY STAR® requirements
- $2,000 for heat pumps (exempt from $1,200 annual cap)
- $150 for home energy audits
To claim, file IRS Form 5695 with your tax return for the year when the improvements were installed (not just purchased).
Learn more about the Energy Efficiency Home Improvement Credit at IRS.gov.
Available to homeowners for improvements made to an existing primary residence between January 1, 2023 and December 31, 2032. Reduced credits available in 2033 and 2034.
- Credit equal to 30% of the cost of clean energy equipment (26% in 2033, 22% in 2034)
- Eligible equipment includes:
- Solar electric panels and shingles
- Solar water heaters (independently certified)
- Battery storage technology
- Fuel cell equipment (at least .5 kilowatt, efficiency >30%)
- Small wind turbines
- Geothermal heat pumps (ENERGY STAR® compliant)
To claim, file IRS Form 5695 with your tax return for the year when the improvements were installed (not just purchased).
Learn more about the Residential Clean Energy Credit at IRS.gov.
Available to eligible residential building contractors through December 31, 2032.
- Single-family and manufactured homes:
- $2,500 for homes that meet ENERGY STAR® standards.
- $5,000 for homes that meet ZERH requirements.
- Multifamily homes:
- $500 per unit for homes that meet ENERGY STAR® standards
- $1,000 per unit for multifamily homes that meet ZERH requirements.
- 5X bonus ($2,500/$5,000 per unit) for homes that also meet prevailing wage requirements.
To claim, file IRS Form 8908 with your business tax return for the year when the home was completed.
ENERGY STAR®
Products used to qualify for tax credits must meet the correct version of ENERGY STAR® standards. The following applies to homes acquired before January 1, 2025:
- Single family new homes in most regions must meet National Version 3.1 requirements and the most recent ENERGY STAR® Single-Family New Homes Program Requirements applicable to the location of the home in effect on Jan 1, 2023.
- Multifamily homes in most regions must meet National Version 1.1 requirements.
- Homes in some states must meet specific requirements, including California, Florida, Hawaii, Oregon, and Washington. Consult the ENERGY STAR® 45L requirements for these states.
- Homes seeking to earn the ENERGY STAR® label must complete the Thermal Bypass Inspection Checklist to ensure proper placement of air barriers and insulation.
Zero Energy Ready Homes (ZERH)
Zero Energy Ready Homes must meet stringent criteria as specified in the National Program Requirements. The following applies to homes acquired on or after January 1, 2023:
- Single and multifamily homes up to 5 stories must meet Version 1, Revision 8 requirements
- Homes in California must meet Version 1, Revision 8 for California
- Homes implementing solar photovoltaic systems must meet the conditions of the ZERH PV-Ready Checklist.
- Other policies and waivers may apply. Review the Program Requirements for more information.
For the most up-to-date information on CertainTeed building solutions that can help you qualify for IRA tax credits and deductions, download our Practical Guide to Residential Energy Efficiency Incentives below under Brochures.
Commercial Energy Efficiency Tax Incentives
Available for improvements made to building systems beginning January 1, 2023. The deductions are not set to expire.
Eligible Recipients
- Owners of qualified commercial buildings, including real estate investment trusts (REITs).
- Designers (architects and engineers) of energy-efficient commercial buildings or systems owned by federal, state, or local governments or certain tax-exempt entities.
Eligible Improvements
- Improvements must reduce total annual energy costs by at least 25% over the appropriate ASHRAE 90.1 benchmark.
- Eligible building systems include:
- Interior and exterior lighting
- Heating, ventilation and air conditioning (HVAC) systems
- Building envelope, including insulation, roofing, and glazing
- Hot water systems
- Other powered equipment that impacts or monitors energy usage
Deductions
- Recipients may claim the lesser of two available deductions:
- Cost of the installed equipment
- Savings per square foot
- $0.50 to $1.00 per square foot, depending on efficiency increase ($0.10 additional for each percentage point improvement to a maximum of 50%).
- Bonus credit: 5X the base amount ($2.50 to $5.00 per square foot) if prevailing wage requirements are met.
- Deductions are capped over a 4-year period for the same property.
To claim, file IRS Form 7205 with your tax return for the year when the improvements were installed (not just purchased).
Learn more about the Energy Efficient Commercial Buildings Deduction at IRS.gov.
ASHRAE 90.1
The requirements defined by ASHRAE 90.1 serve as a benchmark for energy efficiency and influence commercial building codes and “green building” certifications.
- For property placed in service through December of 2026, ASHRAE 90.1-2019 is used.
- For property place in service in 2027 and forward, ASHRAE 90.1-2022 is used.
Learn more at ASHRAE.org.
For the most up-to-date information on CertainTeed building solutions that can help you qualify for IRA tax credits and deductions, download our Practical Guide to Commercial Energy Efficiency Incentives below under Brochures.
Qualify with CertainTeed
We are proud to help you achieve your energy efficiency goals with a broad portfolio of solutions that meet ENERGY STAR® and IECC building envelope requirements, as well as building systems that can help you meet ZERH criteria.
Reach out today to learn how our high-performance insulation, air barriers, siding, roofing, solar systems, and more may help you qualify for Inflation Reduction Act tax credits and deductions.
*CertainTeed has made every attempt to ensure the accuracy and reliability of the information in this guide. However, the information is provided “as is” without warranty of any kind including without limitation the implied warranty of fitness for a particular purpose. CertainTeed does not accept any responsibility or liability for the accuracy, content, completeness, legality, or reliability of the information contained herein. CertainTeed reserves the right to make additions, deletions, or modifications to the contents of this guide at any time without prior notice. CertainTeed is not giving legal or tax advice of any kind; you should seek legal counsel and a tax professional for all legal and tax issues. The information provided in this guide is general in nature and cannot substitute for the advice of a licensed professional.