Energy and Vehicle Credits
Energy Efficient Home Improvement Credit
If you make qualified energy-efficient improvements to your home, you may qualify for a tax credit up to $3,200. The credit equals 30% of qualified expenses.
Annual Limitations
The following annual limitations apply:
1. General Limit
The combined credit for all energy-efficient home improvements is limited to $1,200 per year, except for (6), below.
2. The credit for the following is limited to $600 per year.
a) Central air conditioners.
b) Natural gas, propane, or oil water heaters.
c) Natural gas, propane, or oil furnaces or hot water boilers.
d) Improvements or replacement of panelboards, sub-panelboards, branch circuits, or feeders.
e) Windows and skylights.
3. Exterior Doors
The credit for exterior doors is limited to $250 per year per door and $500 total for all doors.
4. Insulation & Air Sealing
The credit for insulation and air sealing materials or systems specifically and primarily designed to reduce heat loss or gain is limited to $1,200 per year.
5. Home Energy Audits
The credit for home energy audits is limited to $150 per year.
6. Heat Pumps & Biomass Systems
Notwithstanding numbers (1) through (2d), above, the credit allowed for heat pumps and heat pump water heaters, biomass stoves, and boilers is limited to $2,000 per year.
Labor Costs
Labor costs for installing items (2e) through (4), above, do not qualify for the credit.
Primary Residence Only
Items (2e) through (5), above, only apply to costs associated with your main home.
Home Energy Audits
A home energy audit includes a written report and inspection. Home energy audits must be conducted by a qualified home energy auditor.
Nonrefundable Credit
Any excess credit cannot be applied to future tax years.
Residential Clean Energy Credit
If you invest in renewable energy for your home, you may qualify for an annual residential clean energy tax credit.
Qualified Expenses
Qualified expenses include the cost of new clean energy property, including:
- Solar electric panels
- Solar water heaters
- Wind turbines
- Geothermal heat pumps
- Fuel cells
- Battery storage technology (with a capacity of at least 3 kilowatt hours)
Credit Amount
The credit equals 30% of the cost of new, qualified clean energy property installed for your home.
Limits for Fuel Cell Property
The credit for fuel cell property is limited to $500 for each half kilowatt of capacity.
Nonrefundable Credit
Any excess credit can be carried forward and applied to future tax years.
Clean Vehicle Credit
You may receive a credit if you buy a new qualified plug-in electric vehicle (EV) or fuel cell electric vehicle (FCV).
Income Limits
To qualify, your modified adjusted gross income (AGI) may not exceed:
- $300,000 MFJ or a QSS
- $225,000 HOH
- $150,000 Single or MFS
You can use your modified AGI from the year you take delivery of the vehicle or the year before.
Qualified Vehicles
To qualify, a vehicle must:
- Have a battery capacity of at least 7 kilowatt hours
- Have a gross vehicle weight rating of less than 14,000 pounds
- Be made by a qualified manufacturer (EVs)
- Undergo final assembly in North America
- Meet critical mineral and battery component requirements
MSRP Limits
- $80,000 for vans, sport utility vehicles, and pickup trucks
- $55,000 for any other vehicle
The seller must report required information to you at the time of the sale.
Credit Amount
- $3,750 if the vehicle meets one requirement
- $7,500 if the vehicle meets both requirements
Nonrefundable Credit
Any excess credit cannot be applied to future tax years.
Assignment of Credit
Instead of taking a credit on your tax return, you may assign the credit to the dealer as a form of either a partial payment or down payment on the vehicle. If you do this but do not qualify for the credit based on your AGI, you will have to pay the credit back when you file your tax return for the year.
Lookup Tool: To find out which vehicles qualify for the credit, go to www.fueleconomy.gov/feg/tax2023.shtml
Previously-Owned Clean Vehicle Credit
You may receive a credit if you buy a used qualified plug-in electric vehicle (EV) or fuel cell electric vehicle (FCV).
Income Limits
To qualify, your modified adjusted gross income (AGI) may not exceed:
- $150,000 MFJ or a QSS
- $112,500 HOH
- $75,000 Single or MFS
You can use your modified AGI from the year you take delivery of the vehicle or the year before.
Qualified Vehicles
To qualify, a vehicle must:
- Have a sale price of $25,000 or less
- Have a model year at least 2 years earlier than the calendar year when you buy it
- Not have already been transferred after August 16, 2022, to a qualified buyer
- Have a gross vehicle weight rating of less than 14,000 pounds
- Be an eligible FCV or plug-in EV with a battery capacity of at least 7 kilowatt hours
- Be for use primarily in the United States
Sale Requirements
- You purchase the vehicle from a dealer
- The dealer reports required information to you and to the IRS
Credit Amount
The amount of the credit is 30% of the sale price up to a maximum credit of $4,000.
Nonrefundable Credit
Any excess credit cannot be applied to future tax years.
Assignment of Credit
Instead of taking a credit on your tax return, you may assign the credit to the dealer as a form of either a partial payment or down payment on the vehicle. If you do this but do not qualify for the credit based on your AGI, you will have to pay the credit back when you file your tax return for the year.
Lookup Tool: To find out which vehicles qualify for the credit, go to www.fueleconomy.gov/feg/taxused.shtml
Nonrefundable Credit
A nonrefundable credit is limited to the amount you owe in income taxes. It will not decrease your self-employment taxes and cannot give you additional money back as a refund.
Contact Us
There are many events that occur during the year that can affect your tax situation. Preparation of your tax return involves summarizing transactions and events that occurred during the prior year. In most situations, treatment is firmly established at the time the transaction occurs. However, negative tax effects can be avoided by proper planning.
Please contact us in advance if you have questions about the tax effects of a transaction or event, including the following:
- Pension or IRA distributions
- Retirement
- Significant change in income or deductions
- Notice from the IRS or other revenue department
- Job change
- Divorce or separation
- Marriage
- Self-employment
- Attainment of age 59½ or 73
- Charitable contributions of property in excess of $5,000
- Sale or purchase of a business
- Sale or purchase of a residence or other real estate