In 2023, U.S. households claimed $8.4 billion in credits through the Inflation Reduction Act, signaling much greater interest in clean energy and efficiency upgrades than expected.
As CNBC reported, the Act has facilitated home energy-efficiency tax breaks that help people lower their utility bills while reducing harmful carbon pollution.
Over 3.4 million households in the U.S. claimed the energy efficiency home improvement or the residential clean energy tax break on their 2023 taxes. These tax breaks have helped people pay for rooftop solar panels, energy-efficient heat pumps, and other sustainable technologies.
On average, these tax breaks were between around $800 and $5,000 each.
These facts are significant because they show that eco-friendly home upgrades are even more in demand than the government or experts predicted. Yet, it is crucial to understand how these tax breaks work so that you can take advantage of them, too.
Energy-efficient home improvement credits are available for up to 30% of your projects, with some capped and others with no limit. Example projects include new windows, doors, and heat pumps.
Meanwhile, residential clean energy credits go toward 30% of home energy solutions, such as rooftop solar panels and wind turbines.
Most notably, rooftop solar has no cap on the savings, which is great news since that is typically one of the more expensive projects, even though it will save homeowners money in the long run with or without the IRA money back.
You can join the movement of taking advantage of tax breaks and credits by putting up solar panels, installing a heat pump, or making other qualifying home updates. Even though you'll still be responsible for the bulk of the installation costs (beyond the 30% tax credit), you'll have cost savings in your utility bills, an increase in home value, and a better impact on our planet. It's an investment.
A U.S. Department of the Treasury blog reported on this new IRS data: "Energy efficiency and clean energy investments combat climate change and clean the air Americans breathe. According to the EPA, reducing CO2 emissions by 1 ton has a social benefit of $255 in impacts on health, property damage, labor productivity, energy costs, and agriculture, so this would translate to a social benefit of $84 billion to $150 billion per year."
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