The Inflation Reduction Act is the largest bill in U.S. history focused on combating climate change. More than $300 billion will be invested in energy and climate reform through energy tax incentives, investments in clean energy production, and tax credits aimed at reducing carbon emissions.
Beginning January 1, 2023, homeowners can take advantage of energy tax incentives thanks to the extended and expanded 25C tax credit, renamed the Energy Efficient Home Improvement Credit. Key changes are outlined below.
What’s Changing with 25C Under the Inflation Reduction Act?
- The credit was extended for 10 years through December 31, 2032
- The credit opportunity is higher – 30% of qualified energy efficiency improvements with a $1,200 annual limit, up from 10% with a lifetime limit of $500
- Home energy audits qualify for a credit of up to $150
For contractors and installers, this creates an opportunity to grow their remodeling business and serve as a trusted partner for homeowners seeking to take advantage of increased credits year-over-year. Eligible home envelope improvements include:
- Insulation & Air Sealing: Eligible products include spray foam, housewrap, and sealant. Homeowners must obtain a copy of the Manufacturers Certification Statement for their records verifying that components qualify for the tax credit.
- Window & Skylights: Exterior windows or skylights must meet the ENERGY STAR Most Efficient criteria. Visit energystar.gov for a list of eligible windows.
- Exterior Doors: Exterior doors must be ENERGY STAR certified to qualify for this tax credit. Homeowners can claim $250 per door up to $500.
Get more information on eligible products and tax credits here
Beyond window and door replacement, there is also a 30% credit for a Home Energy Audit, not to exceed $150, which helps pinpoint where homes are losing energy. The audit must identify the most significant and cost-effective energy efficiency improvements, including an estimate of the energy and cost savings for each improvement, and be conducted and prepared by a certified home energy auditor.
Often, this includes a blower door test that locates air leaks by using a high-powered fan. The fan evacuates air from the home, creating a low-pressure environment. An air pressure gauge on the assembly precisely measures the rate of air exchange in the home. This is often expressed as air changes per hour at a specified pressure, usually 50 Pascal, or ACH50.
Henry® Can Help
Henry offers a range of Building Envelope System solutions for exterior remodeling projects that help contractors and installers deliver on the promise of a weathertight, energy-efficient home. Flashing tape for window and door installation is one of the key components of an effective weatherization system. Henry offers self-adhered, mechanically applied, and fluid applied flashings compatible with our water-resistive barriers and sealants. And a self-adhered water and air barrier, like Blueskin® VP100, can help provide a continuous plane of airtightness to reduce unwanted air leakage.
Get more exterior remodeling resources here.
Contact a Henry weatherization expert for advice and support on your next job.
Henry Company LLC and its affiliates do not provide tax, legal or accounting advice and are not professionals in these areas. This content has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors regarding the implications of the laws discussed herein.