Energy efficiency at the household level not only depends on using renewable energy, you also know that it is important to control electricity consumption. The White House has just announced the new Insulation Tax Credit, one of the most ambitious programs ever launched in this area. So much so, that you can receive up to $1200 with the requirements that we will now show you.
IRA includes a program for insulation at home: this is your next opportunity
The Inflation Reduction Act, that we have analysed during other weeks, includes an exciting new tax credit for homeowners looking to improve their home’s energy efficiency. This tax credit, which goes into effect in 2023, provides a 30% credit for the costs of certain energy-efficient home improvements.
Insulation, air sealing, and new windows or doors are included. With energy costs rising, this new tax credit makes upgrades that improve efficiency more affordable than ever. Homeowners can receive up to $1,200 in total credits each year from 2023 through 2032, significantly defraying the upfront costs of upgrades.
The credit applies to all qualifying improvements and materials, as well as installation costs. This means the credit can add up quickly for major efficiency overhauls. With the potential to save hundreds of dollars in utility bills each year, on top of tax savings, the long-term payoff for making energy-efficient upgrades is better than ever.
The Insulation Tax Credit, at detail: that´s how you receive u to $1200
The tax credit is officially called the Nonbusiness Energy Property Credit, and is more commonly referred to as the Energy Efficient Home Improvement Credit. This federal tax credit was created to incentivize homeowners to make upgrades that improve the energy efficiency of their homes.
The credit aims to reduce energy consumption across the residential sector in the United States. The new insulation tax credit is available to homeowners who upgrade insulation in their primary residence. To qualify, you must own and live in the home that is being improved.
The tax credit allows homeowners to claim 10% of the cost, up to $500 total, for installing qualified energy-efficient improvements such as insulation, windows, doors, roofs, water heaters, and heating and cooling systems. This credit can be claimed along with similar credits for solar panels and electric vehicles.
Improves that qualify for the Insulation Tax Credit: EPA has confirmed
The tax credit covers installing energy efficient building components in your existing primary residence. The two main upgrades that qualify are adding insulation and installing energy efficient windows or doors.
Insulation
Adding insulation to your home can make a big difference in energy efficiency. Insulation helps prevent heat loss in winter and heat gain in summer. The tax credit applies to insulation that meets certain technical requirements for R-value based on climate zone. Common qualifying insulation upgrades include:
- Attic insulation – Adding insulation to your attic can greatly reduce heat transfer through the ceiling.
- Exterior wall insulation – Insulating outside walls helps prevent heat loss and drafts.
- Basement or crawl space insulation – Insulating foundations and floors over unheated spaces like basements and crawl spaces reduces heat loss through the floor.
Energy Efficient Windows and Doors
Replacing old windows and doors with new energy efficient models can also qualify for the tax credit. New windows and doors reduce air leakage and improve insulation. To qualify, windows and doors must meet certain U-factor and Solar Heat Gain Coefficient (SHGC) technical requirements. The tax credit is available for:
- Energy efficient windows – New windows with low-E coatings or insulating gas fills.
- Energy efficient exterior doors – Insulated doors that reduce heat transfer.
- Storm windows and doors – Adding storm windows and doors over existing ones.
The credit amount is based on the total cost of adding qualifying insulation, windows, and doors. Work needs to be completed according to all applicable building codes and proper installation procedures.
As you can see, the new Insulation Tax Credit is designed to guarantee energy efficiency in the residential sector, precisely one of the sectors that is making the least progress in this area. The intention of the Biden administration and the EPA is to reach an extension of 90% among applicants by 2032. Of course, hurry to apply before the requirements change and become stricter.
