Disclaimer: This webpage provides an overview of how the DOE Zero Energy Ready Home program relates to the New Energy Efficient Home Credit found in Section 45L of the Internal Revenue Code. The information provided here does not constitute professional tax advice or other professional financial guidance. It should not be used as the only source of information when making decisions regarding design, purchasing, investments, the tax implications of new home construction, or when executing other binding agreements. Individuals or entities looking to claim the credit should consult with a tax professional to determine whether and how they can claim the credit and determine whether the credit can be used with other tax incentives or Federal incentives. If there is a conflict between information provided on this webpage and guidance or notices published by the Internal Revenue Service (IRS), the information published by the IRS shall take precedence.
Amended Section 45L
The Inflation Reduction Act of 2022 (IRA) amended Internal Revenue Code Section 45L to provide eligible contractors with a tax credit for eligible new or substantially reconstructed homes that meet applicable ENERGY STAR home program or DOE Zero Energy Ready Home (ZERH) program requirements. The new Section 45L provisions include two tiers of credits, with the higher credits for eligible homes and dwelling units certified to applicable ZERH program requirements. The 45L tax credit is $5,000 for single family and manufactured homes eligible to participate in the EPA's ENERGY STAR Single Family New Homes Program or the ENERGY STAR Manufactured New Homes Program, respectively, and which are certified to applicable ZERH program requirements. The 45L tax credit is $1,000 for dwelling units that are part of a building eligible to participate in the EPA’s ENERGY STAR Multifamily New Construction Program, and which are certified to applicable ZERH program requirements, unless the project meets prevailing wage requirements, in which case the 45L tax credit is $5,000 per dwelling unit. The amended 45L tax credit applies to qualified energy efficient homes acquired after December 31, 2022, and before January 1, 2033, for use as a residence during the taxable year.
Zero Energy Ready Home Program Applicability for the 45L Tax Credit
ZERH certified homes acquired after December 31, 2022 may be eligible for the 45L tax credit. For such ZERH certified homes, Section 45L and IRS Notice 2023-65 set forth specific eligibility requirements for the 45L tax credit, including the following:
- Certification of a home or dwelling unit to the ZERH program requirements in accordance with the ZERH Program Requirements webpage,
- A definition of the eligible contractor (builder) who can claim the credit,
- That a dwelling unit or building be eligible to participate in the ENERGY STAR Residential New Construction program, and
- Acquisition (including sale or lease) of the home or dwelling unit by a person from such eligible contractor for use as a residence during the taxable year in which the credit is claimed.
The ZERH website, including this webpage, only addresses the first of these criteria, ZERH certification requirements. See IRS guidance for Section 45L eligibility requirements pertaining to eligible contractors and acquisition of a qualified home.
ZERH program requirements vary by housing sector. To improve the usability of the program requirements and the certification process for different sectors, DOE develops and maintains program requirements documents for each major housing sector. DOE anticipates updating these documents over the coming years, with new editions of the requirements referred to as program versions.
ZERH Program Version Effective Dates for Section 45L
The DOE ZERH program version that is in effect for a given project is based on the type of housing (e.g., single family, multifamily, etc.) and the Permit Date for the project (or Production Date in the case of Manufactured Homes) as stipulated in the applicable ZERH program requirements document. The ZERH Program Requirements webpage establishes the ZERH certification requirements in effect for each program version by Permit or Production Date, as applicable. Program version effective dates are listed in the table on the webpage and these dates govern the ZERH Program in effect for the purpose of Section 45L. ZERH program requirements documents include detailed definitions of eligible building types.
Frequently Asked Questions
This section is under development by DOE and IRS. Please check back for updates.
Links to Related 45L Information
For More Information
For questions related to how to build and certify homes under the DOE Zero Energy Ready Home program contact a DOE ZERH Builder or Verifier Partner. Current ZERH builders and verifier partners can be found on the Partner Locator tool.