WEST FORT WORTH Blog

Green Home Tax Credits: How You Can Save By Going Green!

As climate change poses continuous threats to the environment, finding eco-friendly home solutions becomes increasingly essential. Green home tax credits are an economical and energy-efficient way to save money. Here’s how!

Extended Green Tax Credits Means More Chances to Save

Green home tax credits are a way to encourage homeowners to make smart-energy investments. Though it requires an upfront investment, improving your home’s energy usage will save you money in the long run. Tax credits like these make it easier for more homeowners to afford the initial upgrades.

Now that many of these credits have been extended, more people can benefit from them. If these credits had expired at the end of 2022, fewer would reap the benefits of an eco-friendly home. With the extension of these credits, there are more opportunities to go green and save green by doing it.

Green Home Federal Tax Credits

Several of the federal tax credits included in the Inflation Reduction Act benefit homeowners who are going green. Here are the three credits, the improvements they cover, and the kinds of savings they offer.

Energy Efficient Home Improvement Credit

Major changes happened to the Nonbusiness Energy Property credit. Now called the Energy Efficient Home Improvement Credit, it’s set to take effect on January 1st, 2023. 

Previously, the credit covered 10% of the cost of insulation, windows, doors, roofing, or other energy-saving improvements. Now, the tax credit limit has been increased to $1,200 from $500. The credit will equal 30% of costs for all eligible home improvements made during the year. It also has been expanded to cover additional measures like biomass stoves and boilers, electric panels, and home energy audits.

Also starting in 2023, the annual limits for certain qualifying alterations were improved. Examples include:

• $250 for exterior doors (or 500 for all exterior doors)
• $600 for exterior windows and skylights
• $2000 for heat pump and heat pump hot water heaters for qualifying homeowners. This is an exception to the $1200 annual limit.

Residential Clean Energy Credit

The Residential Energy Efficient Property Credit has been renamed the Residential Clean Energy Credit and is extended through 2034. If you install clean energy in your home, like solar, wind, or geothermal, you’ll get a percentage of the credit back. From 2023 through 2032, it will rise from 26 to 30%. Then, it will fall back to 26% in 2033. It will then drop to 22% in 2034. This means the best time to install clean energy in your home is now.

High-Efficiency Electric Home Rebate Program

The IRA also includes the $4.28 billion High-Efficiency Electric Home Rebate Program. This rebate is up to $8000 towards heat pumps that can both cool and heat homes. It also includes a $1750 rebate for heat-pump water heaters. There are also provisions for heat-pump clothes dryers, induction ranges, and electrical panel upgrades.

Including the $1600 provision for insulation and sealing, there’s a possible $14,000 to receive in total rebates. In order to qualify, the amount received can’t exceed 150% of the area’s median income. This was calculated by the Department of Housing and Urban Development.

If you’re interested to see what your limit is, Fannie Mae has an Area Median Income Lookup Tool that can help. The rebate starts after December 31st, 2022.

The Benefits of a Green Home Update with Koala Insulation

If you’re updating your home’s insulation in the Fort Worth area, contact the professionals at Koala Insulation. With Koala’s energy payback program, we provide a full range of services to improve both comfort and energy efficiency. 

These improvements don’t just benefit the environment or help you save money. They also make your home more livable and increase its overall value. Call or schedule an appointment to see just how much you can potentially save today!