Many taxpayers are familiar with the Nonbusiness Energy Property Credit that has been a part of our tax code for many years. This allowed for a 10% credit for qualified energy efficient improvements up to a $500 combined limit for all years since its enactment. This credit was still in effect for 2022.
The Inflation Reduction Act of 2022 made significant changes to this credit for expenditures made from 1/1/2023 to 12/31/2032. The credit increases to 30%. Instead of a $500 lifetime limit, an overall $1200 annual limit now applies. Qualified improvements include windows, skylights, exterior doors, heat pumps, water heaters, central air, wood stoves, and even energy audits.
You can receive up to an additional $2000 per year for making qualified investments in heat pumps and biomass stoves and boilers.
Certain improvements made to second homes are eligible for the credit. Some improvements made by tenants may qualify for the credit, but improvements made by landlords do not qualify.
Contact us for more information.