Tax Credit for Residential Window Replacement

The Energy Efficient Home Improvement Credit is back! If you replaced your windows in 2023, or you are considering window replacement in the future, you should know that it could save you money on your taxes!

Keep reading to learn how to take advantage of the tax credit for window replacement.

What Is the Energy Efficient Home Improvement Credit?

The Inflation Reduction Act of 2022 included federal tax credits for energy efficiency; they’re designed to encourage energy efficient upgrades. These tax credits were recently extended through 2032. (Plus, the previous lifetime limit of $500 has been eliminated.)

You can claim up to 30% of the cost of your home upgrades—up to $3,200 yearly.

The maximum amount you can claim each year is:

  • $1,200 for home improvements (limit of $250 per door and $500 total), windows ($600 limit), and home energy audits ($150 limit)
  • $2,000 for qualifying heat pumps, biomass stoves, or biomass boilers
  • $600 per item for qualifying central air conditioners; natural gas, propane, or oil water heaters; or hot water boilers and natural gas, propane, or oil furnaces

Because there is no lifetime limit, you can take advantage of these tax credits every year that you make qualifying energy efficient home improvements until 2033. (This is great for homeowners on a budget who want to space out window replacement, doing a few a year instead of the whole house at once.)

Note that what you claim with the energy efficient home Improvement credit can’t be more than you owe in taxes, and any excess credit can’t be applied to the future.

In addition to the energy efficient home Improvement credit, homeowners can take advantage of the Residential Clean Energy credit. You can claim up to 30 percent of the cost of clean energy upgrades like wind energy, rooftop solar panels, geothermal heat pumps, etc. Also, with this credit, you can apply excess credit to future tax years to reduce the amount you owe.

Who Qualifies for the Tax Credit?

You likely qualify for the energy efficient home improvement credit if you made upgrades to your main home (the house where you live the majority of the time). The house has to be located in the U.S. and has to be an existing home (not a new build).

The tax credit can’t be claimed if the property is used only for business purposes.

What Windows Qualify for the Tax Credit?

As we mentioned above, the tax credit is for energy efficient upgrades.

For windows, they must meet the “Energy Star Most Efficient” certification requirements. (Energy Star is a government program run by the Environmental Protection Agency and U.S. Department of Energy. It sets product standards for energy efficiency.)

You can learn more about what makes a window energy efficient in our previous blog post.

How Can You Claim the Tax Credit?

First, note that you can only claim expenses made in 2023 on your 2024 return. The windows need to have been installed in 2023 (not just purchased).

To take advantage of the window replacement tax credit, you’ll need to file Form 5695, Residential Energy Credits, with your tax return. (If you need help filling out the form, the IRS provides instructions here.)

Thinking about New Windows?

Now is the best time to upgrade to energy efficient windows. If you’re considering new windows this year, Jack’s Glass can help!

Call us today to learn what we can do for you.