When President Biden signed into law the Inflation Reduction Act in August 2022, it represented the largest federal investment ever to address climate change. The home building industry can be a part of this effort through the extension and enhancement of the energy efficient homes tax credit (45L). For the next 10 years, builders and developers will be able to count on and plan for a significant tax credit to build better, high-performance homes that lower utility bills for hardworking families and create good-paying jobs.
This past September, the IRS released new guidance on the 45L tax credit to clarify who is eligible to claim the credit, what the energy savings requirements are for each tier of the credit (which range from $500 to $5,000), and what the requirements are for certification and substantiation. Certified Zero Energy Ready single-family homes are eligible for a $5,000 tax credit, as are units in multifamily buildings if the credit’s prevailing wage requirements are met. Homes must be certified to the Zero Energy Ready Home program version in effect based on the project’s Permit Date (or Production Date for Manufactured Homes), as defined in the program requirements document corresponding to the building type. The table below outlines program version effective dates for eligible projects.
Multifamily buildings up to five stories are currently eligible for the tax credit under Version 1, Revision 8. Starting in 2024, multifamily buildings of any height will be eligible under Version 1, Revision 9. DOE is developing ZERH Multifamily Version 2, with an implementation date of January 1, 2025.
Additionally, in 2023, the Zero Energy Ready Home program released Manufactured Homes Version 1 (Pilot) to give manufacturers an immediate path to certification and eligibility for the $5,000 tax credit in 2023, while simultaneously allowing time to conduct research and solicit feedback from all interested stakeholders to improve the program.
The ZERH program has a webpage dedicated to information on the 45L tax credit, which will be continuously updated with any information and resources that become available. For those looking to learn more and get involved in the Zero Energy Ready Home program, our new ZERH Orientation Training is available on demand. For any questions on the ZERH program, please email us at firstname.lastname@example.org.
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