26 USC 25 - Energy efficient home improvement credit

View all text of Subpart A [§ 21 - § 26]

§ 25C. Energy efficient home improvement credit

(a) Allowance of creditIn the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to 30 percent of the sum of—

(1) the amount paid or incurred by the taxpayer for qualified energy efficiency improvements installed during such taxable year,

(2) the amount of the residential energy property expenditures paid or incurred by the taxpayer during such taxable year, and

(3) the amount paid or incurred by the taxpayer during the taxable year for home energy audits.

(b) Limitations

(1) In general

(2) Energy property

(3) Windows

(4) DoorsThe credit allowed under this section by reason of subsection (a)(1) with respect to any taxpayer for any taxable year shall not exceed—

(A) $250 in the case of any exterior door, and

(B) $500 in the aggregate with respect to all exterior doors.

(5) Heat pump and heat pump water heaters; biomass stoves and boilers

(6) Home energy audits

(A) Dollar limitation

(B) Substantiation requirement

(1) In generalThe term “qualified energy efficiency improvements” means any energy efficient building envelope component, if—

(A) such component is installed in or on a dwelling unit located in the United States and owned and used by the taxpayer as the taxpayer’s principal residence (within the meaning of section 121),

(B) the original use of such component commences with the taxpayer, and

(2) Energy efficient building envelope componentThe term “energy efficient building envelope component” means a building envelope component which meets—

(A) in the case of an exterior window or skylight, Energy Star most efficient certification requirements,

(B) in the case of an exterior door, applicable Energy Star requirements, and

(C) in the case of any other component, the prescriptive criteria for such component established by the most recent International Energy Conservation Code standard in effect as of the beginning of the calendar year which is 2 years prior to the calendar year in which such component is placed in service.

(3) Building envelope componentThe term “building envelope component” means—

(A) any insulation material or system, including air sealing material or system, which is specifically and primarily designed to reduce the heat loss or gain of a dwelling unit when installed in or on such dwelling unit,

(B) exterior windows (including skylights), and

(4) Manufactured homes included

(d) Residential energy property expendituresFor purposes of this section—

(1) In generalThe term “residential energy property expenditures” means expenditures made by the taxpayer for qualified energy property which is—

(A) installed on or in connection with a dwelling unit located in the United States and used as a residence by the taxpayer, and

(B) originally placed in service by the taxpayer.

Such term includes expenditures for labor costs properly allocable to the onsite preparation, assembly, or original installation of the property.

(2) Qualified energy propertyThe term “qualified energy property” means any of the following:

(A) Any of the following which meet or exceed the highest efficiency tier (not including any advanced tier) established by the Consortium for Energy Efficiency which is in effect as of the beginning of the calendar year in which the property is placed in service:

(i) An electric or natural gas heat pump water heater.

(ii) An electric or natural gas heat pump.

(iii) A central air conditioner.

(iv) A natural gas, propane, or oil water heater.

(v) A natural gas, propane, or oil furnace or hot water boiler.

(B) A biomass stove or boiler which—

(i) uses the burning of biomass fuel to heat a dwelling unit located in the United States and used as a residence by the taxpayer, or to heat water for use in such a dwelling unit, and

(ii) has a thermal efficiency rating of at least 75 percent (measured by the higher heating value of the fuel).

(i) is placed in service after December 31, 2022, and before January 1, 2027, and—(I) meets or exceeds 2021 Energy Star efficiency criteria, and(II) is rated by the manufacturer for use with fuel blends at least 20 percent of the volume of which consists of an eligible fuel, or

(ii) is placed in service after December 31, 2026, and—(I) achieves an annual fuel utilization efficiency rate of not less than 90, and(II) is rated by the manufacturer for use with fuel blends at least 50 percent of the volume of which consists of an eligible fuel.

(D) Any improvement to, or replacement of, a panelboard, sub-panelboard, branch circuits, or feeders which—

(i) is installed in a manner consistent with the National Electric Code,

(ii) has a load capacity of not less than 200 amps,

(iii) is installed in conjunction with—(I) any qualified energy efficiency improvements, or(II) any qualified energy property described in subparagraphs (A) through (C) for which a credit is allowed under this section for expenditures with respect to such property, and

(iv) enables the installation and use of any property described in subclause (I) or (II) of clause (iii).

(3) Eligible fuelFor purposes of paragraph (2), the term “eligible fuel” means—

(A) biodiesel and renewable diesel (within the meaning of section 40A), and

(B) second generation biofuel (within the meaning of section 40).

(e) Home energy auditsFor purposes of this section, the term “home energy audit” means an inspection and written report with respect to a dwelling unit located in the United States and owned or used by the taxpayer as the taxpayer’s principal residence (within the meaning of section 121) which—

(1) identifies the most significant and cost-effective energy efficiency improvements with respect to such dwelling unit, including an estimate of the energy and cost savings with respect to each such improvement, and

(2) is conducted and prepared by a home energy auditor that meets the certification or other requirements specified by the Secretary in regulations or other guidance (as prescribed by the Secretary not later than 365 days after the date of the enactment of this subsection).

(f) Special rulesFor purposes of this section—

(1) Application of rules

(2) Joint ownership of energy items

(A) In general

(B) Limits applied separately

(3) Property financed by subsidized energy financing

(g) Basis adjustments

(h) TerminationThis section shall not apply with respect to any property placed in service—

(1) after December 31, 2007, and before January 1, 2009, or

(2) after December 31, 2032.

(Added Pub. L. 109–58, title XIII, § 1333(a), Aug. 8, 2005, 119 Stat. 1026; amended Pub. L. 109–135, title IV, § 412(b), Dec. 21, 2005, 119 Stat. 2636; Pub. L. 110–172, § 11(a)(2), Dec. 29, 2007, 121 Stat. 2484; Pub. L. 110–343, div. B, title III, § 302(a)–(e), Oct. 3, 2008, 122 Stat. 3844, 3845; Pub. L. 111–5, div. B, title I, §§ 1103(b)(2)(A), 1121(a)–(e), Feb. 17, 2009, 123 Stat. 320, 322–324; Pub. L. 111–312, title VII, § 710(a), (b), Dec. 17, 2010, 124 Stat. 3314; Pub. L. 112–240, title IV, § 401(a), Jan. 2, 2013, 126 Stat. 2337; Pub. L. 113–295, div. A, title I, § 151(a), Dec. 19, 2014, 128 Stat. 4021; Pub. L. 114–113, div. Q, title I, § 181(a), (b), Dec. 18, 2015, 129 Stat. 3072; Pub. L. 115–123, div. D, title I, § 40401(a), Feb. 9, 2018, 132 Stat. 148; Pub. L. 115–141, div. U, title IV, § 401(a)(4)–(6), Mar. 23, 2018, 132 Stat. 1184; Pub. L. 116–94, div. Q, title I, § 123(a), (b), Dec. 20, 2019, 133 Stat. 3231; Pub. L. 116–260, div. EE, title I, §§ 141(a), 148(b)(3), Dec. 27, 2020, 134 Stat. 3054, 3055; Pub. L. 117–169, title I, §§ 13301(a)–(f)(3)(A), (g)(1), (h)(1), 13704(b)(1), Aug. 16, 2022, 136 Stat. 1941–1946, 2002.)