LEXINGTON Blog

Green Home Solutions Get You Tax Credits for Going Green: Here's How

Introducing green home solutions to your home isn’t just good for the environment, but it also helps you financially, too.

Green home solutions indeed offer a reduction in monthly energy costs. However, there are even more ways to save. In addition to reduced energy costs, there are also tax credits available through the Inflation Reduction Act. This makes the transition to green energy even easier.

Today, we’ll take a closer look at 3 tax credits available when you introduce green energy to your home. We’ll examine which green solutions qualify, how to apply for them, and just how much you can save.

The Residential Clean Energy Credit: A Green Home Credit for Everyone

Any aspiring green home that installs solar energy qualifies for the Residential Energy Efficient Property Credit. The program now extends from 2023 to 2034.

If you install solar, wind, or geothermal energy, you can now claim a credit of 30% from 2022 to 2032. But, if you wait to install until 2033 or 2034, the percentage drops to 26 and 22%, respectively.

The amount of this credit has increased (from 26 to 30%) and now covers multiple forms of energy besides solar. Now, it’s even easier to qualify and save even more in the long run!

The High-Efficiency Electric Home Rebate: Get Money Back for Green Home Design

If you qualify, The High-Efficiency Electric Home Rebate program rewards green home design with a maximum possible savings of $14000. We’ll break down the benefits item by item to explain how and where you can save.

The program starts with an upfront rebate of $8000 on heat pump installation. It also provides a rebate of up to $1750 off heat pump water heaters. With that is an additional savings of $840 for heat-pump clothes dryers or electric stoves, including induction ranges.

Moreover, if your electrical panels need updating, there’s a potential $4000 rebate as well. If your home’s wiring needs improvement to update your electric panels, there’s also a $2500 rebate for further improvements. Even more, insulation and sealing pose a $1600 rebate through the High-Efficiency Electric Home Rebate.

To qualify for this program, your household income cannot exceed 150% of the area’s median income. If you want to double-check the amount in your area, you can use this Area Median Income Lookup Tool. The rebates began after December 31st, 2022, and will continue until 2032.

The Energy Efficient Home Improvement Credit: Save Big on Green Home Improvements

Formerly known as the Nonbusiness Energy Property Credit, the Energy Efficient Home Improvement Credit rewards green home improvement.

Previously, the credit was worth up to $500 for up to 10% of the cost of installing energy-saving home improvements. This includes improvements like insulation, roofing, and sealing windows and doors.

Starting in 2023, there is now a $1200 annual tax credit, covering up to 30% of eligible home improvements. Even better, the credit expands to cover biomass stoves and boilers, electric panels, home energy audits, and more.

On top of that, there’s been an increase in annual limits for qualifying alterations. For example, it’s $250 for an exterior door or $500 for all exterior doors. Additionally, windows and skylights qualify for a $600 credit.

With exception to the annual limit, there’s a $2000 rebate for heat pumps and heat pump water heaters. This especially applies to homeowners who don’t qualify for the rebate due to higher household income.

Go Green and Save Green with Koala Insulation

With these tax credits, it makes both financial and environmental sense to install green home improvements in the foreseeable future. These improvements will save you money on monthly energy costs and improve your general quality of life, too.

Improvements to your insulation will keep you comfortable year-round while saving on energy bills. New to Lexington, Koala Insulation is here to help you benefit from these programs. Call or schedule a consultation with one of our insulation experts, and ask about our energy payback program.