The Inflation Reduction Act paved its way for the 2023 Solar and Energy efficiency tax credits giving taxpayers rebates for making energy efficiency upgrades to their homes.
2023 Inflation Reduction Act Tax Credits
For those who are about to install solar panels or upgrade to more energy-efficient appliances, this year is the best time to do it. The Inflation Reduction Act helps you cope by investing in upgrades like solar panel installation, solar batteries, heat pumps, and more.
IRA was able to make two separate tax credits available to taxpayers in 2023. These are the Investment Tax Credit and the Energy Efficient Home Improvement Tax Credit. The Solar Investment Tax Credit already exists but was recently increased and extended by the Inflation Reduction Act. This gives homeowners and businesses a tax credit worth 30% of their total solar panel installation costs.
The solar investment tax credit offers:
- 30% tax credit for residential and commercial solar installation with no cap
- Available from 2022 until 2032 (step-down schedule begins in 2033)
- Solar batteries, including standalone batteries, are eligible
- Can be rolled over if the credit exceeds your tax liability
The energy-efficient home improvement tax credit offers:
- 30% tax credit for qualifying residential energy efficiency upgrades
- Available from 2023 until 2032
- Retroactive to projects completed in 2022, but at their original 10% value
- $1,200 annual limit (exceptions for certain measures)
Services that Qualify for the Energy Efficient Home Improvement Tax Credit
According to a published post by Boston Solar, when it comes to saving energy, energy-efficient home improvements can go a long way. The IRA rewards homeowners who make energy-efficient upgrades with tax credits for a wide range of services:
- Heat pumps and heat pump water heaters with a $2,000 maximum credit
- Electrical panel upgrades with a $600 maximum credit
- Insulation and air sealing with a $1,200 maximum credit
- Energy-efficient HVAC equipment with a $600 maximum credit
- Energy audits with a $150 maximum credit
- Energy-efficient exterior windows with a $600 maximum credit
- Energy-efficient exterior doors with a $500 maximum credit