Note: this page is for informational purpose only. Please seek tax advice from your tax professional.
We understand that energy-efficient improvements not only benefit the environment but may also help you save money on your energy bills. The government recognizes this too and offers tax credits for certain energy-efficient home improvements. Below, we'll be discussing the Energy Efficient Home Improvement Credit available for existing homes only.
The Energy Efficient Home Improvement Credit is an annual tax credit equal to the sum of 30% of the cost of energy improvements made in the tax year across three categories identified as: qualified energy efficiency improvements, residential energy property expenditures, and home energy audits.
Let's break down these three categories further to understand the home improvements that qualify for the tax credit and how much tax credit you can receive.
Who qualifies?
Individuals that pay income taxes. The tax credit will reduce your tax requirements, but not below zero.
Qualified Energy Efficiency Improvements
The first category available for credit is the amount paid for qualified energy efficiency improvements installed during the tax year. These improvements include energy-efficient building envelope components of insulation, air sealing, exterior windows, skylights, and doors. The tax credit amount for these improvements is 30% of the cost with caps and energy efficiency requirements as shown in the table below.
| Improvement Type | Energy Efficiency Requirements | IRA Incentives | Energize CT Incentive |
| Insulation | Batts, rolls, blow-in fibers, rigid boards, expanding spray, and pour-in-place. | Families can claim up to $1,200 for any combination of insulation, air sealing, exterior windows, skylights and doors on a primary residence.
| For a $50 fee through Home Energy SolutionsSM, Eversource and Avangrid customers are eligible to receive 70-100% off approved insulation projects. If your family’s combined gross annual income is below the state’s 60% income median, you may be eligible to receive the assessment and service at no-cost. |
| Air sealing | Weather stripping, spray foam in a can, caulk designed to air seal, house wrap, as long it comes with a Manufacturers Certification Statement. | Families can claim up to $1,200 for any combination of insulation, air sealing, exterior windows, skylights and doors on a primary residence. | For a $50 fee through Home Energy SolutionsSM, Eversource and Avangrid customers receive an assessment and service that includes sealing air leaks and ductwork (Advanced duct sealing if recommended by your contractor). If your family’s combined gross annual income is below the state’s 60% income median, you may be eligible to receive the assessment and service at no-cost. |
| Windows and Skylights | Options available at this link | Families can claim up to $1,200 for any combination of insulation, air sealing, exterior windows, skylights and doors on a primary residence | Eversource and Avangrid customers are eligible to receive a $100 rebate per ENERGY STAR® Triple-Pane window with a U-Factor of less than or equal to 0.20 if replacing single pane, single pane with storms or double pane windows. |
| Exterior doors | Must be ENERGY STAR® certified | $250 each, up to $500
| The Sponsors of Energize CT do not offer incentives on energy-efficient doors at this time |
Residential Energy Property Expenditures
The second category is the amount of residential energy property expenditures incurred during the tax year. These expenditures include heat pump water heaters, central air conditioners, natural gas, propane, or oil water heaters, natural gas, propane, or oil furnaces or hot water boilers, biomass stoves or boilers, and oil furnaces or hot water boilers that meet the ENERGY STAR efficiency standards. The tax credit is 30% of the installed cost with caps and energy efficiency requirements as follows:
| Improvement Type | Energy Efficiency Requirements | IRA Incentives | Energize CT Incentive |
|
Ducted or mini-split system heat pumps |
Air Source Heat Pumps Tax Credit | ENERGY STAR
|
Families can claim up to $2,000 on a primary or secondary residence for the installation of a ducted or mini-split heat pump in tax credits each year. |
Customers of Eversource and Avangrid can receive a rebate up to $15,000 for the installation of an air or ground source heat pump. |
|
Central air conditioners |
Central Air Conditioners Tax Credit | ENERGY STAR Current Efficiency Requirements >=SEER 16 |
Families can claim up to $600 on a primary or secondary residence for the purchase of an energy-efficient central air conditioner in tax credits each year. |
The Sponsors of Energize CT do not offer rebates on central air conditioners at this time |
|
Hot water boilers (natural gas, propane, or oil fueled) |
Hot Water Boilers (Natural Gas, Propane, Oil) Tax Credit | ENERGY STAR Current Efficiency Requirements >=AFUE 95% |
Families can claim up to $600 on a primary or secondary residence for the purchase of an energy-efficient hot water boiler in tax credits each year. |
Eversource and Avangrid customers are eligible for $750 off the cost of qualifying natural gas boilers. |
|
Biomass fuel stoves |
Biomass Stoves/Boilers Tax Credit | ENERGY STAR Efficiency >=75% |
Families can claim up to $2,000 on a primary or secondary residence for the purchase of an energy-efficient biomass fuel stove in tax credits each year. |
The Sponsors of Energize CT do not offer rebates on biomass fuel stoves at this time |
|
Furnaces (natural gas or oil) |
Furnaces (Natural Gas, Oil) Tax Credits | ENERGY STAR Efficiency >=97% |
Families can claim up to $600 on a primary or secondary residence for the purchase of an energy-efficient furnace in tax credits each year. |
Eversource and Avangrid customers are eligible for $650 off the cost of qualifying natural gas furnaces. |
|
Heat pump water heaters |
Heat Pump Water Heaters Tax Credit | ENERGY STAR Must be ENERGY STAR rated |
Families can claim up to $2,000 on a primary or secondary residence for the installation of a heat pump water heater in tax credits each year. |
Eversource and Avangrid customers are eligible for $750 off the cost of qualifying heat pump water heaters. |
|
Natural gas storage water heaters |
Water Heaters (Natural Gas) Tax Credit | ENERGY STAR Efficiency must be >= 0.81 for less than 55 gallons and >=0.86 for greater than or equal to 55 gallons |
Families can claim up to $600 on a primary or secondary residence for the purchase of an energy-efficient natural gas storage water heater in tax credits each year. |
Eversource and Avangrid customers are eligible for a $300 instant discount on eligible natural gas storage water heaters. |
|
Electrical Panel |
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Panel or subpanel |
Must be installed to enable the installation of an energy efficiency property or improvement |
Families can claim up to $600 on a primary or secondary residence for the installation of an energy-efficient panel or subpanel in tax credits each year. |
The Sponsors of Energize CT do not offer incentives on electrical panels at this time |
Home Energy Audits
The third category is for home energy audits. The tax credit amount for home energy audits is 30% of the audit cost up to $150 annually.
It's important to note that the Energy Efficient Home Improvement Credit is only available for existing homes, not new construction. Labor costs for installation can be included in the costs and the IRS has allowances to capture labor if you install the improvement or equipment yourself.
To claim the tax credit, you must file IRS Form 5695 with your tax return. The tax credit is only for your primary residence and there are certain limitations. For example, if you receive utility rebates for any of the qualified improvements, you must subtract the amount of the rebate from the total cost of the improvement when calculating the tax credit. The total annual tax credit limit is $3,200. If you do not owe any taxes, then you cannot claim a tax credit.
In conclusion, the Energy Efficient Home Improvement Credit is an excellent opportunity for homeowners to save money on their energy bills while also helping the environment. If you've recently made any energy-efficient home improvements, be sure to look into this tax credit and see if you're eligible to claim it. If you have any questions or concerns, don't hesitate to contact us for more information.
Additional Energy Efficiency Incentives
In addition to the federal tax credit mentioned above, there are additional energy efficiency opportunities offered through our Energize Connecticut programs that offer additional rebates or incentives. (Restrictions may apply).
