A building science-based, comprehensive, certified energy audit by Better Building Works offers a customized strategy to maximize tax credits in 25C & 25D, and improve indoor air quality.

THE INFLATION REDUCTION ACT
*Better Building Works can also assist with Commercial Tax Credits!
25C RESIDENTIAL ENERGY EFFICIENCY TAX CREDIT
25D RESIDENTIAL CLEAN ENERGY TAX CREDIT

The details on 25C: heat pumps, heat pump water heaters, and more

  • Available now
  • 30 percent capped tax credit for residential efficiency and electrification upgrades, up to $3,200 per year (see chart)
  • Annual total credit for heat pumps and heat pump water heaters capped at $2,000
  • Annual total credit for other upgrades capped at $1,200; limits per upgrade may apply
  • Covers purchase and installation costs for heat pumps, HPWHs, and panel upgrades; covers just purchase costs for other listed upgrades
  • Upgrades subject to efficiency requirements
  • Up to $600 for electrical panel upgrades if they are installed in conjunction with and enable a heat pump or HPWH
  • Credit limit is annual (not lifetime), so it resets each year and can be used again
  • Nonrefundable, so households must have adequate tax liability to offset

The details on 25D: rooftop solar, battery storage, and geothermal heating

  • Available now (new version of 25D also retroactive to all of 2022)
  • 30 percent uncapped tax credit for rooftop solar, battery storage, and geothermal heating
  • Should include electrical panels if they are installed in conjunction with and enable any of the above installations
  • Covers purchase and installation costs
  • Nonrefundable, so households must have adequate tax liability to offset
  • Carry-forward ability applies, so households may roll over unused tax credits year over year

Verify all tax credits and deductions with a certified public accountant.

FREQUENTLY ASKED QUESTIONS

Our energy audit maximizes savings by making improvements in the right order: 1) building enclosure 2) equipment 3) then add solar.

Will 25C and 25D be retroactive?
25C and 25D were available starting January 1, 2023, so save your receipts for filing season! If you installed rooftop solar in 2022, it is eligible for the new, 30% 25D tax credit. If you installed a heat pump in 2022, it is elgible for the old 25C tax credit: 10% of costs up to $300.

Will 25C and 25D reduce up-front costs for consumers?
No, but they will reduce total costs.

Can renters utilize 25C and 25D?
Yes! Renters may be specifically interested in the 25C credit for portable, window-unit heat pumps once the Consortium for Energy Efficiency releases relevant efficiency standards (hopefully by 2024).

Who qualifies for 25C and 25D?
Anyone with adequate tax liability to offset can qualify for 25C and 25D.

Can 25C and 25D stack with other incentives?
Yes! 25C and 25D can stack with other federal incentives like the Electrification Rebates and the Efficiency Rebates.

Do 25C and 25D cover electrical panel upgrades?
25C and 25D cover panel upgrades if they are installed in conjunction with and enable the installation of another covered upgrade, like a heat pump or rooftop solar, respectively.

Do smart panels qualify for 25C and 25D?
Yes, as long as they have capacity of at least 200A.

Do 25C and 25D apply to new construction?
No for 25C; yes for 25D.

Which tax credits cover which heat pumps?
25C covers air-source heat pumps, and 25D covers geothermal heat pumps.

Does 25C have efficiency requirements?
Yes. 25C is applicable only to heat pumps and HPWHs that meet the Consortium for Energy Efficiency’s highest non-”advanced” tier. ENERGY STAR-certified doors and ENERGY STAR Most Efficient-certified windows also are eligible.

What does it mean that 25C resets every year?
By resetting every year, 25C will be available to households for multiple upgrades over multiple years. For example, if a household maxes out 25C in one year by claiming a $2,000 credit for a heat pump and a $1,200 credit for insulation, that household can utilize 25C again in a future year for a HPWH and an electrical panel upgrade.

Does 25D cover community solar?
25D may cover community solar in some cases, if you’re a partial owner of a community solar installation. If you’re a “subscriber” to a community solar project owned by a developer (including nonprofits, co-ops, and local governments), you’ll likely not be eligible for 25D, but the developer may be eligible for the supplier-facing Section 48 investment tax credit. The details on 25D: rooftop solar, battery storage, and geothermal heating FREQUENTLY ASKED QUESTIONS Our energy audit maximizes savings by making improvements in the right order: 1) building enclosure 2) equipment 3) then add solar. Save energy and money! | 540-345-0900 ext. 222 | [email protected]

*This document is adapted from Rewiring America.

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