Learning Center
We keep you up to date on the latest tax changes and news in the industry.

Maximize Your Savings: Expert Insights on the Energy Efficient Home Improvement Credit for 2024

Maximize Your Savings: Expert Insights on the Energy Efficient Home Improvement Credit for 2024

The transition to sustainable living has become a top priority for both homeowners and policymakers. The Energy Efficient Home Improvement Credit represents a significant opportunity to reduce your tax liability while investing in energy-saving upgrades for your home. As tax and accounting professionals, we’re here to break down the latest IRS guidance, address the complexities of eligibility, and provide practical advice for successfully claiming this valuable tax credit.

Image 1

Background: Clean Energy Incentives and the Inflation Reduction Act

The Inflation Reduction Act of 2022 ushered in a new era for clean energy incentives, introducing multiple tax credits designed to reward sustainable home improvements. Among these is the non-refundable Energy Efficient Home Improvement Credit. This credit encourages taxpayers to invest in approved upgrades, including high-efficiency HVAC systems, insulation, windows, doors, and — as clarified by IRS Notice 2023-59 — qualified home energy audits.

Key Requirements: What Qualifies for the Energy Efficient Home Improvement Credit?

The credit is available for the purchase and installation of qualifying energy-efficient property in your principal residence located in the United States. Eligible improvements include:

  • Energy Star certified windows, doors, and skylights
  • High-efficiency air conditioners, water heaters, and furnaces
  • Advanced insulation and air sealing products
  • Home energy audits performed by qualified professionals

To maximize your credit, ensure your expenditures meet all IRS requirements, including proper documentation and compliance with technical efficiency standards.

Image 2

Decoding IRS Notice 2023-59: Home Energy Audit Criteria

IRS Notice 2023-59 clarifies that the cost of a qualified home energy audit is eligible for the Energy Efficient Home Improvement Credit. However, not all audits qualify. Your audit must be performed by a certified auditor and include:

  • An examination of your entire residence to identify inefficiencies
  • Recommendations for upgrades and improvements based on energy savings potential
  • A comprehensive written report with itemized findings and actionable steps

Properly maintaining this documentation is crucial for substantiating your tax credit claim during an IRS review or audit.

Tax Planning Strategies: Maximizing Your Credit

  • Timing is key: Coordinate your improvements to maximize annual credit limits and consider bundling projects for greater savings.
  • Consult with a professional: Work with a tax expert or credentialed accountant who specializes in real estate and energy credits for seamless compliance and recordkeeping.
  • Leverage local and state incentives: Complement federal credits with available state, local, or utility company rebates.
Image 3

Best Practices for Documentation & Claiming the Credit

For optimal audit readiness and tax savings, make sure to:

  • Retain all receipts, certifications, and audit reports
  • Work exclusively with licensed contractors and certified energy auditors
  • Complete IRS Form 5695 accurately, referencing all improvements and associated costs

Remember, the credit is non-refundable — you can reduce your tax bill to zero, but any excess credit won’t be refunded or carried forward.

Professional Guidance: Unlock Full Value from Clean Energy Tax Credits

Navigating the landscape of home energy tax credits can be challenging. Our team brings specialized accounting knowledge and mastery of current tax codes, ensuring you don’t miss out on valuable deductions and credits. If you’re considering significant energy-efficient upgrades, or if you’d like a thorough review of your eligibility, don’t hesitate to contact our office. With expert guidance, you can unlock maximum savings and support a greener future for your home and community.

Ready to take the next step or have more questions on leveraging the Energy Efficient Home Improvement Credit? Contact our office today for personalized tax planning advice tailored to your home and financial goals.

Share this article...

Want tax & accounting tips and insights?

Sign up for our newsletter.

I confirm this is a service inquiry and not an advertising message or solicitation. By clicking “Submit”, I acknowledge and agree to the creation of an account and to the and .
FAQs Frequently Asked Questions
Type your questions here.
Please fill out the form and our team will get back to you shortly The form was sent successfully