Federal, state, and local governments offer significant incentives for homeowners who make energy-efficient upgrades. These rebates and tax credits can save you thousands—but many homeowners don't know they exist.

Federal Tax Credits (2024-2032)

The Inflation Reduction Act expanded tax credits for energy-efficient home improvements. Here are the major ones:

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Residential Clean Energy Credit

30% of cost

Eligible improvements:

  • Solar panels (photovoltaic systems)
  • Solar water heaters
  • Wind turbines
  • Geothermal heat pumps
  • Battery storage (3+ kWh)
  • Fuel cells
No maximum limit on the credit amount. Applies to installations through 2032 (phases down to 26% in 2033, 22% in 2034).
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Energy Efficient Home Improvement Credit

30% of cost, up to $3,200/year

Eligible improvements:

HVAC & Water Heating ($2,000 annual limit)

  • Heat pumps (air source)
  • Heat pump water heaters
  • Biomass stoves and boilers

Building Envelope ($1,200 annual limit)

  • Insulation
  • Windows and skylights
  • Exterior doors
  • Central A/C, furnaces, boilers
  • Home energy audits ($150 max)

State and Local Rebates

Many states offer additional incentives that stack with federal credits:

Utility Company Rebates

Many utilities offer $50-$500 rebates for energy-efficient appliances, smart thermostats, and weatherization.

State Tax Credits

Some states add their own tax credits on top of federal ones—check your state's energy office website.

PACE Financing

Property Assessed Clean Energy programs let you finance improvements through property taxes.

Find Your Local Incentives

Visit dsireusa.org (Database of State Incentives for Renewables & Efficiency) to find all available rebates and credits in your area.

High-Impact Rebate Programs

HOMES Rebate Program (Coming 2024-2025)

Part of the Inflation Reduction Act, this program offers:

  • Up to $8,000 for whole-home energy improvements achieving 35%+ energy reduction
  • Up to $4,000 for improvements achieving 20-34% reduction
  • Higher amounts for low-to-moderate income households

High-Efficiency Electric Home Rebate Program

Income-qualified households may receive:

  • $8,000 for heat pumps
  • $4,000 for electrical panel upgrades
  • $2,500 for electric wiring
  • $1,750 for heat pump water heaters
  • $840 for electric stoves and dryers

How to Claim These Credits

1
Keep all receipts and documentation

You'll need proof of purchase and installation dates.

2
Get manufacturer certifications

Products must meet energy efficiency requirements. Manufacturers provide certification statements.

3
File IRS Form 5695

Use this form with your tax return to claim residential energy credits.

4
Consult a tax professional

Especially for larger projects, professional guidance ensures you maximize your credits.

Quick Reference: Credit Amounts

Improvement Credit
Solar panels 30% (no limit)
Battery storage 30% (no limit)
Heat pump 30% (up to $2,000)
Heat pump water heater 30% (up to $2,000)
Windows & doors 30% (up to $1,200)
Insulation 30% (up to $1,200)
Central A/C 30% (up to $600)
Energy audit 30% (up to $150)

Important Notes

  • Tax credits reduce your tax liability—you must have tax liability to benefit
  • Some credits can be carried forward to future years
  • Credits apply to principal residences (some also to second homes)
  • Rules and amounts may change—verify current requirements

Track Your Home Improvement Savings with NestorAI

NestorAI helps you organize everything you need for tax credits:

  • Store receipts and manufacturer certifications
  • Track improvement costs and dates
  • Get reminders about filing requirements
  • Calculate potential savings before you buy
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