Home Efficiency and Green Energy Tax Rebates Extended For Residential and Business Owners in 2022 and 2023

While not as generous as in previous years, there are several energy efficient tax credits and breaks available for 2022, which can be claimed when filing returns in 2023.

This includes the residential energy efficient property credit, which allows for a credit equal to the applicable percent of the cost of qualified property. 

Qualifying properties are solar electric property, solar water heaters, geothermal heat pumps, small wind turbines, fuel cell property, and, starting December 31, 2020, qualified biomass fuel property expenditures paid or incurred in taxable years beginning after that date. 

Only fuel cell property is subject to a limitation, which is $500 with respect to each half kilowatt of capacity of the qualified fuel cell property. 

Generally, this credit for alternative energy equipment terminates for property placed in service after December 31, 2023. The applicable percentages are:

  1. In the case of property placed in service after December 31, 2016, and before January 1, 2020, 30%.
  2. In the case of property placed in service after December 31, 2019, and before January 1, 2023, 26%.
  3. In the case of property placed in service after December 31, 2022, and before January 1, 2024, 22%.

Source: IRS


[2013 updates] As part of the deal to avert the fiscal cliff, legislated under the American Taxpayer Relief Act (ATRA) of 2012, certain energy tax credits were extended into 2013.  You can read this article for an overview of these credits and other 2013 income tax related changes.

  • The$500 tax credit for installing energy efficient improvements to existing homes — such as improved HVAC units, windows, furnaces, and heat and water pumps — was extended through 2013. The law also updated the standards that such appliances would need to achieve to be eligible for the incentive.
  • New Energy Efficient Homes Credit — The law extends through 2013 the tax incentive for the production of energy efficient homes. To be eligible, new homes must achieve a 30 percent or 50 percent improvement over heating or cooling energy usage of a comparable residence. The level of efficiency determines the value of the credit.
  • Energy Efficient Appliance Credit — The tax credit for U.S.-manufactured, energy-efficient appliances was extended through 2013. This credit includes refrigerators, dishwashers and clothes washers.

Source : Lexology

[Update Dec 2010] President Obama has signed into law a bill that covers a $858 billion extension of all the bush-era tax cuts, plus some additional tax benefits. With this legislation he has essentially created a new 2011 Economic Stimulus package, that includes the following green energy tax breaks:

  • Energy-Efficient new homes credit discussed in the update below has been extended through 2011.
  • Biodiesel and renewable diesel – extends through 2011 the $1.00 per gallon production tax credit for biodiesel.
  • Alternative fuels credit – extends through 2011 the $.50 (cents) per gallon alternative fuel tax credit.
  • Ethanol – extends through 2011 the per gallon tax credits for ethanol. Includes existing $.54 (cents) tariff on imported ethanol.

  • Energy Efficient Appliances – extends through 2011 tax credit for manufacturers of energy-efficient large appliances.

While the Senate debates more green energy bills (see update below), the IRS has provided more details on the 2 primary green energy rebates that allow homeowners to make energy-saving improvements this fall; that cut their winter heating bills and lower their 2010 tax bill as well.

Nonbusiness Energy Property Credit

This credit equals 30 percent of what a homeowner spends on eligible energy-saving improvements, up to a maximum tax credit of $1,500 for the combined 2009 and 2010 tax years. The cost of certain high-efficiency heating and air conditioning systems, water heaters and stoves that burn biomass all qualify, along with labor costs for installing these items. In addition, the cost of energy-efficient windows and skylights, energy-efficient doors, qualifying insulation and certain roofs also qualify for the credit, though the cost of installing these items does not count.

By spending as little as $5,000 before the end of the year on eligible energy-saving improvements, a homeowner can save as much as $1,500 on his or her 2010 federal income tax return. Due to limits based on tax liability, amounts spent on eligible energy-saving improvements in 2009, other credits claimed by a particular taxpayer and other factors, actual tax savings will vary. These tax savings are on top of any energy savings that may result.

Residential Energy Efficient Property Credit

Homeowners going green should also check out a second tax credit designed to spur investment in alternative energy equipment. The residential energy efficient property credit equals 30 percent of what a homeowner spends on qualifying property such as solar electric systems, solar hot water heaters, geothermal heat pumps, wind turbines, and fuel cell property. Generally, labor costs are included when figuring this credit. Also, except for fuel cell property, no cap exists on the amount of credit available.

Not all energy-efficient improvements qualify for these tax credits. For that reason, homeowners should check the manufacturer’s tax credit certification statement before purchasing or installing any of these improvements. The certification statement can usually be found on the manufacturer’s website or with the product packaging. Normally, a homeowner can rely on this certification.

The IRS cautions that the manufacturer’s certification is different from the Department of Energy’s Energy Star label, and not all Energy Star labeled products qualify for the tax credits.

Eligible homeowners can claim both of these credits when they file their 2010 federal income tax return. Because these are credits, not deductions, they increase a taxpayer’s refund or reduce the tax owed. An eligible taxpayer can claim these credits, regardless of whether he or she itemizes deductions on Schedule A. Use Form 5695, Residential Energy Credits, to figure and claim these credits.

I will provide more updates as they are made available and encourage you to subscribe (free) to get the latest news.

[Previous Update]- 2010 Home Star Green Energy Retrofit $8,000 Rebates and Tax Credits to Make Your House Energy Efficient

The Senate has released more details on a new $6 billion energy stimulus package titled the Home Star Energy Retrofit Act of 2010 aimed at creating clean energy jobs and to promote residential energy efficiency programs. It is expected to save participating homeowners $200–500 per year in energy costs and provide various rebates (up to $8,000) and environmental benefits. The key provisions include:

$250–1500  Silver  Star  rebates.  For  the  first  year  of  the  program,  consumers  can  receive  between  $250  and  $1500  in  “point–of–sale”  rebates  for  each  retrofit  involving  individual energy efficiency measures,  with  a  benefit  not  exceeding  $3,000  or  at  least  50%  of  total  project  costs  (whichever  is  less).  Eligible  energy efficiency measures  include insulation,  duct  sealing,  water  heaters,  HVAC  systems,  windows,  doors,  and  cool  roofs.  Rebates  will  be  targeted  to  the  most  energy  efficient  categories  of  upgrades,  focusing  on  products  primarily  made  in  the  United  States. All  retrofits  must  be  installed  by  a  certified  contractor.

$3000  Gold  Star  rebates.For  the  first  two  years  of  the  program,  consumers  interested  in whole  home  retrofits would  be  eligible  for  up  to  $3000  “point–of–sale”  rebate  for  a  comprehensive  energy  audit  and  retrofits  tailored  to  achieve  a  20%  energy  savings  in  the  home.  Consumers  can  receive  additional  incentives  for  energy  savings  higher  than  20%.  The  Gold  Star  rebate  program  would  build  on  existing  whole  home  retrofit  programs (versus individual measures in the Silver star rebates program),  such  as  EPA’s  Home  Performance  with  Energy  Star  program  and  DOE’s  building  programs.

$3000  performance  tax  credit. After  the  first  year,  consumers  can  receive  tax  credits  for  whole  home  retrofits  that  meet  100  HERS  for  buildings  constructed  prior  to  2000,  and  85  HERS  for  building  constructed  after  2000.   Homeowners  can  receive  up  to  $8000  in  rebates  or  50%  of  the  total  retrofit  cost.   These  tax  credits  will  be  available  until  the  end  of  2013 and can be claimed when tax returns are filed.

Rebate  process.  Consumers  are  eligible  for  discounted  prices  of  the  installation  of  Silver  Star  measures  at  the  point  of  sale.  Upon  job  completion,  contractors  submit  rebate  requests  to  rebate  aggregators,  such  as  small  independent  building  material  dealers,  large  national  home  improvement  chains ((e.g Home Depot or Lowe’s),  merchants  across  the  country,  energy  efficiency  installation  professionals  and  utility  energy  efficiency  programs  (including  rural  utilities)  and  then  are  reimbursed  by  the  federal  government.

Given contractor and vendor issues with past energy efficiency programs and stimulus tax credits, the new bill is also putting some more stringent qualification criteria around contractors. They need  to  be  licensed  and  insured  to  install  the  retrofits. Licensing is enforced by the states according to federal guidelines.Independent  quality  assurance providers will be  responsible  for  field  audits  after  job  completion  in  order  to  ensure  proper  installation  and  measurable  energy  savings  for  consumers

In total the The Senate bills (S3177, S3434) promoting this program, referred to as the Cash for Caulkers legislation, would offer rebates of as much as $8,000 to homeowners who retrofit with energy-efficient insulation, windows and heating and cooling equipment. The Home Star program to cut energy use from appliances and air conditioners would create as many as 168,000 jobs over the next two years, according to the Alliance to Save Energy, a Washington-based group the promotes energy efficiency.

The Senate legislation also offer rebates to people who buy gas- powered cars or trucks or convert conventional vehicles to gas. It also would give grants of as much as $50,000 to companies that put natural gas refueling stations into service between 2011 and 2015. The Senate bills have to be reconciled, then go back to the house and merged with the original house bill (HR 5019) before being sent to the President for approval of the program and payments.

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7 thoughts on “Home Efficiency and Green Energy Tax Rebates Extended For Residential and Business Owners in 2022 and 2023”

  1. 2-13-11

    I just had an energy audit and had an energy company submit their bid to install upgrades I chose for my home: Radiant barrier shield, additional insulation, installation of a solar attic fan, and a water heater wrap. Contract showed total price, a discount from list price, an instant rebate of $1750, and a 30% Fed tax credit which would total $4100. My research shows there is a $1500 limit on the Fed tax credit so I will not be saving what the contract shows. Any comments or updates on the Fed tax credit will be appreciated. Thanks.

  2. When can we realistically expect this bill to be signed? I am prepared to do some major projects but don’t want to lose out on possible rebates, but at the same time I am anxious to get the jobs done before the winter sets into the midwest.

  3. We’re about to install a new heat pump that qualifies for the current federal tax credit. Do we put the install on hold and hope this passes? Can the tax credit and the Home Star rebate be used together?

  4. This is great! Sure, it’s a bone to the manufacturing and construction industries, but it’s money well invested. The need to protect the climate is very real, and this is the way to do it; buildings account for half of overall energy usage and carbon emissions, and older homes and buildings are the worst of all.

    The price tag is modest–a tiny fraction of what we just dumped into banks and insurers–and this is money that repays us in jobs and energy savings. Win-win.

  5. It is amazing how much money they (the Obama administration) is throwing at homeoners. First it is the $8K home buyer credit, cash for appliances program and now more energy efficiency programs. Our childeren and their great grand children will be paying for these measures for generations to come. Also, for non-home owners who pay taxes, this is really unfair

  6. Don’t forget that, homestar is projected to create 168,000 jobs in the construction sector, whose unemployment rate is 27 percent. In 2011, the program would save electricity equivalent to four 300-megawatt power plants and the equivalent of 6.8 million barrels of heating oil, leading to $9.2 billion in energy savings for homeowners.

  7. I Iike the concept, I’m going to loathe the execution. Getting a qualified building inspector is difficult, at best. Adding another layer of inspection (state oversight) is going to be the biggest hurdle. I’m all for the rebates though.


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