Making your home more energy-efficient can save you money on utility bills – and right now, it can also help you save on your taxes. But time is running out.
Federal tax credits for clean energy and efficiency upgrades – like installing solar panels, adding insulation, or replacing old appliances with high-efficiency models – are set to expire at the end of 2025.
Consumer Reports’ Sara Enright joined the Standard with what homeowners and renters need to know. Listen to the interview above or read the transcript below.
This transcript has been edited lightly for clarity:
Texas Standard: These credits have been around for a while, but can you give us a big picture? What kind of upgrades qualify for these tax credits, and how much money can people actually save in the real world?
Sara Enright: Sure. We’re talking about the Residential Clean Energy Credit and the Energy Efficient Home Improvement Credit, which were created in 2022 under the Inflation Reduction Act.
These are available now, but they’ve been shortened to the end of this year. So if you want to take advantage, you have four months before December 31 to purchase and install upgrades in order to qualify on your next tax return.
Let me ask about that install date. If you’ve purchased the upgrade but haven’t had time to install it, can you still claim the credits – or do you have to race to get it done before the deadline?
Our understanding is that it needs to be installed before the end of the year for you to take advantage of the credit.
Okay. Any other advice for folks who want to get in before the deadline?
Yes. On the energy efficiency side, we’re talking about things like smart thermostats, high-efficiency air conditioners, insulation and heat pumps.
For clean energy, that means solar panels, solar water heaters, and battery storage systems.
There’s a wide range of products. You can find details on the IRS website, which manages the program, and Consumer Reports also has a primer available for folks who want a quick look at eligibility and available products.
» GET MORE NEWS FROM AROUND THE STATE: Sign up for Texas Standard’s weekly newsletters
I bet you get this question a lot: You walk into a Lowe’s or Home Depot, you see a refrigerator with an energy rating, and think, “Oh yeah, there’s that tax credit.” Do refrigerators qualify?
No, refrigerators don’t qualify for these tax credits.
But we always recommend energy-efficient appliances – especially Energy Star-rated ones – because they save money on utility bills and often pay for themselves over time. An energy-efficient home with good insulation and Energy Star-rated appliances can save up to 30% on utility costs.
It sounds like many of these tax savings are geared toward homeowners. What about renters?
Most of these incentives focus on homeowners and primary residences. There are a few upgrades renters can claim – backup batteries, for example – but you’ll want to read the fine print carefully.
Besides federal credits, what other resources should folks look into, maybe at the state or local level?
Energy efficiency is good for utilities, too, because it lowers demand. So your local utility, city or state government may offer rebates, often focused on low-income consumers.
The details vary, so it’s worth doing an internet search before you buy.
Even after these credits expire, which upgrades are most worthwhile in terms of long-term savings and comfort?
Many older homes are less efficient than they could be. We’ve made big advances in insulation, windows and doors.
A good first step is a home energy efficiency audit – having a professional identify where you can save the most. And if you do it before December 31, you can claim a credit of up to 30% or $150 off the audit itself.
Wait, so those audits qualify too?
That’s right. You pay upfront, and then you’re reimbursed through your tax return.
Any last tips you’d like to share?
We don’t recommend buying systems just because of a rebate. Energy-efficient systems are a good investment regardless, and Consumer Reports can help identify which appliances are reliable, efficient and rated highly by other consumers.
If you found the reporting above valuable, please consider making a donation to support it here. Your gift helps pay for everything you find on texasstandard.org and KUT.org. Thanks for donating today.
