How Green Energy Tax Breaks May Impact Your Tax Refund in 2024

The 2024 tax season is fast approaching and is expected to come with significant changes, especially in the realm of home energy credits. The Inflation Reduction Act of 2022 has opened doors for homeowners who made efforts to improve the energy efficiency of their homes in 2023. These individuals stand to receive more money back come tax time, particularly those who have integrated alternative energy sources into their homes. However, even simple improvements to oil or gas appliances and structural components like insulation, windows, and doors can also yield tax benefits this tax season. As part of the 12 Days of Tips, we take a closer look at these tax credits for energy improvements and how to claim them on your taxes.

The IRS currently allows two main tax credits for energy efficiency improvements: the energy-efficient home improvement credit and the residential clean energy property credit. The energy-efficient home improvement credit provides 30% of the installation costs back, with limits, for certain Energy Star-certified devices or other energy improvements such as new insulation, doors, windows, and so on. The credit has seen some significant changes as part of the Inflation Reduction Act of 2022. The $500 lifetime limit has been increased to $1,200 annually, while items like water heaters, heat pumps, biomass stoves, and biomass boilers now have a separate credit limit of $2,000, allowing homeowners to get up to $3,200 back yearly.

The residential clean energy credit, on the other hand, offers a 30% tax break for expenses related to qualified improvements that use alternative power sources like solar, wind, geothermal, or biomass energy. The credit has seen some adjustments as well, and it currently stands at 30%, up from 26% last year, until 2033. Property that qualifies for this credit includes solar electricity, solar water heating, wind turbines, geothermal heat pumps, biomass fuels, and fuel cells, among others.

In addition to these two main tax credits, homeowners can also claim the alternative fuel vehicle refueling property credit for installing green energy charging stations. Beginning in the 2022 tax year and lasting until the end of 2032, homeowners who install electric vehicle charging stations can qualify for 30% back for hardware and installation costs, up to a maximum of $1,000.

All these tax credits can significantly offset tax liabilities and offer substantial savings for homeowners who have taken steps to improve their homes’ energy efficiency. It is crucial to capitalize on these opportunities, especially with energy costs expected to rise in 2024. By investing in energy-efficient improvements now, homeowners can save money while contributing to environmental conservation. Be sure to use Form 5695 and Form 8911 for filing on paper to claim these credits. And for digital tax returns, be sure to use a trusted tax software that can identify and automatically input these credits for you. This year, make sure that you’re maximizing your tax rebates by claiming all the energy improvements made to your home.


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