Inflation Reduction Act 2022: What homeowners need to know
Homeowners can take advantage of energy-related tax credits that were passed as part of the Inflation Reduction Act.
While the benefits in 2022 are generally a revival of expired programs, new and expanded benefits have been added starting in 2023.
Green home improvements
For 2022, a homeowner can take a lifetime tax credit of $500 for energy efficiency improvements such as insulation, improved windows or doors, or energy-efficient HVAC. This is a one-year revival of the Nonbusiness Energy Property Credit, which had expired in 2021. If you’ve previously claimed a tax credit of this nature, you may have already used up your lifetime limit under this program.
Beginning in 2023, the Nonbusiness Energy Property Credit is being restructured as the Energy Efficient Home Improvement Credit. Under this program, homeowners can generally take a tax credit equal to 30 percent of all eligible home improvements made over the year. The $500 lifetime limit is being replaced with a $1,200 annual limit.
Project specific limits still apply, such as a $150 credit limit for a home energy audit, $250 for an exterior door, $600 for windows and skylights, etc.
Additional tax credits are available under the existing Residential Energy Efficient Property Credit, which is renamed the “Residential Clean Energy Credit” for 2023 and beyond.
These programs provide credits for solar, fuel cell, wind energy, and geothermal in 2022, with battery storage systems added in 2023.
Electric vehicle charging
There are new tax breaks available for purchasing an electric vehicle (EV) as well as a revived tax break for installing an EV recharging center in your home, for up to $1,000.
Energy efficient appliances
A separate program will provide rebates to low-and middle-income families who purchase energy-efficient electric appliances. Households with less than 150 percent of the median local income will qualify.