What Home Improvements Qualify for the 25(C) Credit?
The 25(C) Tax Credit covers a wide range of energy efficiency home improvements. Here are some of the most common upgrades that qualify:
Insulation - Additional insulation in walls, floors, roofs, basements and crawl spaces. Includes blown-in, spray foam and other types.
Windows and doors - Replacing old windows and doors with ENERGY STAR models. This includes windows, skylights, patio doors.
HVAC systems - Upgrading heating, ventilation and air conditioning systems to ENERGY STAR models.
Water heaters - Replacing old water heaters with new ENERGY STAR models.
Roofs - ENERGY STAR certified metal and asphalt roofs.
Biomass stoves - New high-efficiency wood stoves and pellet stoves.
Air sealing - Sealing air leaks throughout the home with caulk, weatherstripping, and other materials.
Insulation materials - Purchases of insulation, air sealing and duct sealing materials.
Electric vehicle chargers - Charging equipment for electric vehicles.
All products must be ENERGY STAR certified or meet minimum efficiency requirements to qualify for the 25(C) Credit.
How Much Can You Save with the 25(C) Tax Credit?
The 25(C) Tax Credit offers a maximum lifetime credit of $500 for things like windows, doors, insulation, and roofs. For more advanced products like biomass stoves or HVAC systems, the maximum is $300. In total, you can claim up to $500 in combined credit each year.
Assuming you spend $5,000 replacing all the windows in your home, you could claim 30% of that cost (up to the $500 limit) to save $150 on your taxes. If you also replace your HVAC system for $4,000, you could claim another 30% ($300 max) to save an additional $90.
The total tax savings for these sample upgrades would be $240. So the 25(C) Credit would reduce the out-of-pocket cost by almost $1,000!