Thanks to President Biden’s Investing in America plan, it’s easier than ever to take control of your energy costs, make your home safer and more comfortable, and help save the planet. No matter who you are or where you live, clean energy and energy efficient consumer choices are available now, and the Department of Energy is working to make them more affordable and accessible. For more information, review the Energy Savings Hub Frequently Asked Questions (FAQs) below.
WHAT IS THE DIFFERENCE BETWEEN A TAX CREDIT AND A REBATE?
A tax credit is a dollar-for-dollar amount taxpayers claim on their tax return to reduce the income tax they owe. Eligible taxpayers can use them to reduce their tax bill and potentially increase their refund. Rebates on the other hand, which can come from your utility or a government program, provide you savings at time of purchase or shortly thereafter.
ARE THESE CLEAN ENERGY TAX CREDITS REFUNDABLE OR NON-REFUNDABLE? WHAT’S THE DIFFERENCE?
All of the clean energy tax credits made available for consumers through the Inflation Reduction Act are non-refundable. A non-refundable tax credit can decrease your taxes owed to zero, but will not result in a refund for any amount that exceeds your tax liability for the year. Learn more about the difference.
HOW DO I GET MY TAX CREDIT SAVINGS?
Residential Energy Credits can be claimed by submitting IRS Form 5695 when filing your taxes.
Electric or fuel cell vehicle tax credits for qualifying individuals who purchased a NEW or USED qualifying vehicle in 2023 or later can be claimed by submitting IRS Form 8936 when filing your taxes.
Electric vehicle tax credits for qualifying individuals who purchased NEW qualifying vehicle in 2022 or before can be claimed by submitting IRS Form 8936 when filing your taxes.
Commercial clean vehicle tax credits for businesses or tax-exempt organizations that purchase one or several qualifying commercial clean vehicles will be able to claim their savings on a forthcoming revised IRS form. Learn more >>
ARE THERE ANNUAL LIMITS TO HOW MUCH I CAN SAVE?
The following tax credits have a cumulative annual cap of $1,200 per taxpayer:
- Energy efficient air conditioners
- Breaker box or circuit upgrades
- Exterior Doors
- Energy efficient heating equipment (excluding heat pumps)
- Home Energy Audits
- Insulation materials
- Energy efficient natural gas, propane, or oil water heaters
- Windows and skylights
The following types of equipment have a cumulative annual cap of $2,000:
- Efficient Heat Pumps
- Efficient Heat Pump Water Heaters
- Efficient Biomass Stoves and Boilers
CAN I TAKE ADVANTAGE OF MULTIPLE TAX CREDITS IN ONE YEAR?
Yes! As long as you're accounting for specific caps (see above), multiple tax credits can be used in the same year. BUT a reminder that non-refundable tax credits, like the Home Energy Tax Credits only reduce your federal tax liability to zero. So, for example, if you owe $10,000 in federal taxes for a given tax year, that is the maximum amount of non-refundable tax credits you may be able to take advantage of that year.
IF AN INCENTIVE IS SUBJECT TO AN ANNUAL PRICE CAP, AND I REACH IT, AM I ELIGIBLE TO APPLY FOR THE INCENTIVE THE NEXT YEAR?
In general, yes. If you make multiple improvements of the same type over multiple years — like upgrading windows over time, for example — you would be eligible for the incentive each tax year. However, for the Energy Efficient Home Improvement Credit (e.g., exterior doors, windows and skylights, energy efficient air conditions and water heaters, or home energy audits) you cannot split the cost of a purchase installed in one year over multiple tax years (e.g., trying to claim a $600 tax credit for two years in a row for one $1,200 purchase). For the Residential Clean Energy Property Credit (e.g., battery storage technology expenditures and solar water heating, solar electric, small wind energy, geothermal heat pump, or fuel cell property expenditures), a taxpayer may carry forward the unused amount of the credit to reduce tax liability in future tax years. Learn more about home energy tax credits.
IF AN INCENTIVE DOES NOT HAVE AN ANNUAL PRICE CAP, CAN I CLAIM THE CREDIT AGAIN IF I PURCHASE A SIMILAR ITEM IN THE FUTURE?
Yes, so long as any incentive-specific requirements (like needing to meet a certain energy efficiency level) are met.
ARE THERE ANY INCENTIVES FOR ENERGY-EFFICIENT NATURAL GAS, PROPANE, BIOMASS, OR OIL-POWERED TECHNOLOGY?
Yes. While electric appliances are typically cleaner and more efficient, incentives exist for qualifying energy efficient natural gas, propane, biomass and oil equipment, including:
- Natural gas heat pumps
- Natural gas heat pump water heaters
- Natural gas or propane or oil water heaters
- Natural gas or propane or oil furnaces or hot water boilers
- Biomass stoves and biomass boilers
ARE THERE ANY INCENTIVES SPECIFICALLY FOR LOWER- OR MODERATE-INCOME HOUSEHOLDS?
Home energy rebates will be available for lower and moderate-income households — including households with no federal tax liability. More information on the Home Energy Rebates programs will be released later this year.
IS THERE AN INCOME OR PRICE CAP ON INCENTIVES?
For some incentives, yes. The clean vehicle tax credits have income limitations (with adjustments based on whether you are a joint taxpayer, head of household, or other taxpayer) and price caps based on the type of vehicle (learn more). Many of the forthcoming clean energy rebates will also have income limits. However, the home energy tax credits that power many of the incentives listed on this site do not have income caps.
CAN THESE FEDERAL INCENTIVES BE COUPLED WITH STATE OR LOCAL INCENTIVES?
For many people, yes, but it depends on the circumstances. The IRS describes different situations in Question 4 of the General Questions section of this FAQ. You can also check with your state’s energy office or your utility to see if state or local clean energy or efficiency incentives exist and what those eligibility requirements are.
DO THE ELECTRIC VEHICLE TAX CREDITS APPLY TO PICK-UP TRUCKS?
Yes. NEW or USED cars, vans, SUVs, and pick-up trucks purchased in 2023 or later that meet certain requirements are eligible. Qualifying NEW cars, vans, SUVs, and pick-up trucks purchased in 2022 or before are eligible. Find the specific models that may qualify here. More information about these tax credits are available on the IRS website.
WHEN DO THE TAX CREDITS GO AWAY?
The incentives under President Biden’s Investing in America agenda are available through 2032.
IS SPARKY A VERY GOOD DOG?
They say there’s no such thing as a silly question, but this comes awfully close. Of course.