Save Big With Federal Home-Energy Tax Credits
Published on August 01, 2024
Here in Clearwater, creating a more sustainable city is a value we strive to uphold. Adapting sustainable initiatives at the local government level is essential for promoting environmental stewardship, fostering economic growth, enhancing resilience to climate change and improving overall public health.
Not only do we as a city aim to enhance our sustainability efforts, but we strongly encourage our residents to do so as well. Given recent federal legislation advancements, there are newfound federal tax credit incentives that may benefit you via home improvements, clean-energy projects and vehicle purchases. The city is currently in the process of exploring such incentives, and you may wish to do the same for yourself and your household.
The Inflation Reduction Act of 2022 is one of the largest investments in the American economy, energy security and climate that Congress has made to this date. One of the key subsections of the act is the ability for individuals and entities to receive federal clean-energy tax credits from 2022 to 2032. The two credits most applicable to residents are the Home Energy Credits and Clean Vehicle Credits.
For home energy credits, there are residential clean-energy credits and energy-efficient home improvement credits. Residential clean-energy credits include the addition of solar, geothermal and wind installations, as well as solar water heaters, fuel cells and battery storage. Residents can receive credits up to 30 percent of a project’s value, with no annual maximum or lifetime limit.
Energy-efficient home improvement credits include the installation of exterior doors, windows, skylights and insulation materials, air conditioners, water heaters, furnaces, heat pumps, biomass stoves, boilers and the cost to conduct a home energy audit. Residents can receive credits up to 30 percent of a project’s value with a $1,200 annual maximum and no lifetime limit. Once you determine whether your project is eligible, file IRS form 5695 along with your annual income tax return in order to apply for the credit. More information about the filing process can be found under the link below!
For clean-vehicle credits, residents who buy a qualified new or used electric vehicle (EV), plug-in EV or fuel cell electric vehicle, may qualify for a tax credit from $3,751 to $7,500. Vehicle qualification depends on the sale price, battery capacity, weight, manufacturer, assembly in North America and critical mineral and battery component requirements. The vehicle must be for personal use in the United States and not for resale. There are maximum income limits and tax filing requirements, and the completion of IRS tax form 8936 is required.