Tax Credits

Heat pumps and biomass stoves and boilers

Heat pumps and biomass stoves and boilers with a thermal efficiency rating of at least 75% qualify for a credit up to $2,000 per year. Costs may include labor for installation.

Qualified improvements include new:

Electric or natural gas heat pumps

Electric or natural gas heat pump water heaters

Biomass stoves and boilers

Beginning Jan. 1, 2023, the credit equals 30% of certain qualified expenses, including:

Qualified energy efficiency improvements installed during the year

Residential energy property expenses

Home energy audits

There are limits on the allowable annual credit and on the amount of credit for certain types of qualified expenses. The credit is allowed for qualifying property placed in service on or after Jan. 1, 2023, and before Jan. 1, 2033.

The maximum credit you can claim each year is:

$1,200 for energy property costs and certain energy efficient home improvements, with limits on doors ($250 per door and $500 total), windows ($600) and home energy audits ($150)

$2,000 per year for qualified heat pumps, biomass stoves or biomass boilers

The credit has no lifetime dollar limit. You can claim the maximum annual credit every year that you make eligible improvements until 2033. 

The credit is nonrefundable, so you can't get back more on the credit than you owe in taxes. You can't apply any excess credit to future tax years.

Who qualifies

You may claim the energy efficient home improvement credit for improvements to your main home. Your main home is generally where you live most of the time.

For the energy efficiency home improvement credit, the home must be:

Located in the United States

An existing home that you improve or add onto, not a new home

In most cases, the home must be your primary residence (where you live the majority of the year). You can't claim the credit if you're a landlord or other property owner who doesn't live in the home.

Business use of home 

If you use a property solely for business purposes, you can't claim the credit.

If you use your home partly for business, the credit for eligible clean energy expenses is as follows:

Business use up to 20%: full credit

Business use more than 20%: credit based on share of expenses allocable to nonbusiness use

Read more at https://www.irs.gov/credits-deductions/energy-efficient-home-improvement-credit