Did you know that you can claim up to $3,200 every year for improvements to your home? 

On August 16, 2022, the Inflation Reduction Act of 2022 was signed into law, providing $369 billion in funding to tackle climate change and bring the United States closer to its goal of cutting climate pollution in half from 2005 levels by 2030. 

New tax incentives are already in effect for residents like you looking to weatherize their homes, install heat pumps, and make other energy efficiency improvements.  

How much does the 25C tax credit include for energy efficiency upgrades? 

Households can deduct 30% (or up to the yearly limit of $3,200) of the cost of upgrades like: 

  • Weatherization: Up to $1,200 
  • Heat pump: Up to $2,000 
  • Heat pump water heater: Up to $2,000 
  • Electrical panel upgrade: Up to $600 

The yearly limit of the Energy Efficiency Home Improvement Credit (25C) resets every year. 

Are there still incentives and rebates offered by the Mass Save® Sponsors? 

Yes! Mass Save rebates and incentives aren’t going anywhere. You can still access 75-100% off insulation upgrades, up to $10,000 in heat pumps rebates, 0% financing up to $50,000 for home upgrades, and more. 

Are the IRA 25C tax credits stackable with Mass Save incentives? 

Yes, they could be! For example, you can claim 75-100% off your insulation costs through the Mass Save program and then claim your entire co-pay (or up to $1,200) as a tax deduction under the IRA. 

Do I need to owe taxes to access the 25C tax credit? 

Yes. The credit is nonrefundable, so you can’t get back more on the credit than you owe in taxes. You also can’t apply any excess credit to future tax years. 

Can I claim the tax credit for a newly constructed home? 

No, but you may claim the energy efficient home improvement credit for improvements to your main, already existing home. For energy efficiency in new construction, see tax credit 45L. 

Are the credits available for a second home or an investment property? What about renters? 

The credit for building envelope improvements (like exterior doors, windows and skylights, insulation, and air sealing) is only available for primary residences. Credits for heat pumps, heat pump water heaters, oil and natural gas furnaces, panelboards, and central AC units are eligible for both second homes and renters. 

Is labor an eligible expense for building envelope improvements under the 25C credit? 

No, but labor is an eligible expense for other non-envelope upgrades like heat pumps, water heaters, central AC, and more. 

Can I claim the tax credit for multiple improvements in the same tax year? 

Yes, you can claim up to $3,200 in tax credits every year for combined upgrades. 

What is the Homeowner Managing Energy Savings (HOMES) Rebate program? 

The $4.3 billion in performance-based, whole-home rebates is geared toward air sealing, insulation, appliances, and HVAC for single- and multi-family homes at all income levels. 

What is the High-Efficiency Electric Home Rebate Act (HEERA)? 

The $4.5 billion is to fund the electrification of low- and moderate-income households. Rebates include heat pumps, heat pump water heaters, and rooftop solar. 

Are all incentives already available under the Inflation Reduction Act? 

While some incentives are available like the 25C tax credits, others are still rolling out and we’re waiting to see when and how that happens. 

Can HomeWorks Energy help me navigate the tax credits? 

Yes! At your no-cost Home Energy Assessment, your home energy specialist will walk you through the incentives available from the Mass Save Sponsors and the tax credits available through the Inflation Reduction Act. Get all of your questions answered – no obligation and no cost. 

To schedule your no-cost Home Energy Assessment in minutes, call (781) 305-3319 or go online here. 

It’s our goal to help you save!