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A black house silhouette occupies the left side, while the right side features a notepad displaying information on energy-efficient home improvements.

Video Tips: Take Advantage of Tax Credits for Energy-Efficient Home Improvements

In a bid to encourage sustainable practices and energy efficiency, the IRS has recently issued Notice 2023-59, outlining the prerequisites for home energy audits for taxpayers seeking to include audit costs when claiming the energy-efficient home improvement credit. This credit, introduced under the Inflation Reduction Act of 2022, presents a unique opportunity for homeowners to make their residences more energy-efficient while benefiting from a non-refundable tax credit.

Understanding the Energy-Efficient Home Improvement Credit

The Energy-Efficient Home Improvement Credit is designed to incentivize homeowners to adopt energy-efficient practices by offering a non-refundable tax credit for qualifying home improvements. This credit covers the purchase and installation of specific energy-efficient enhancements in a taxpayer’s principal residence.

Key Requirements and Benefits

To qualify for the credit, homeowners must adhere to specific requirements regarding the type of clean energy property or service purchased and how they are claimed. The maximum annual credit stands at $1,200, equivalent to 30% of all qualified item costs, capped at $4,000. It’s important to note that this credit is non-refundable, meaning it can only offset tax liability down to zero with no carryover.

Planning for Maximum Benefit

Given the non-refundable nature of the credit, strategic planning of expenditures over multiple years is crucial to maximizing the benefits. Homeowners should carefully consider the timing and nature of their energy-efficient improvements to optimize their tax credits.

The Role of Home Energy Audits

One valuable aspect of the Energy-Efficient Home Improvement Credit is the provision for a 30% tax credit for home energy audits. These audits are conducted by experts who identify the most significant and cost-effective energy efficiency improvements for the residence. This additional tax credit for a home energy audit is limited to $150 (30% of $500) and is separate from the annual $1,200 improvements credit.

Making the Most of the Energy-Efficient Home Improvement Credit

Now that we understand the basics of the Energy-Efficient Home Improvement Credit, let’s delve into practical steps homeowners can take to make the most of this opportunity.

  1. Choosing the Right Improvements: When considering energy-efficient improvements, focus on those that align with the guidelines provided by the IRS. This could include upgrading insulation, installing energy-efficient windows, or investing in high-efficiency heating and cooling systems.
  2. Consulting with Experts: Take advantage of the 30% tax credit for a home energy audit. This not only helps in identifying the most impactful improvements but also ensures that you make informed decisions about enhancing your home’s energy efficiency.
  3. Strategic Expenditure Planning: Given the annual cap of $1,200, plan your expenditures strategically over multiple years to maximize the credit. Prioritize improvements that offer the most significant energy savings while staying within the overall cost limit.


In conclusion, the Energy-Efficient Home Improvement Credit provides a valuable opportunity for homeowners to contribute to environmental sustainability while enjoying financial benefits. By understanding the requirements, planning strategically, and considering expert advice through home energy audits, individuals can unlock substantial savings and make their homes more energy-efficient. Take the initiative today and embark on a journey towards a greener, more sustainable future.

JS Morlu LLC is a top-tier accounting firm based in Woodbridge, Virginia, with a team of highly experienced and qualified CPAs and business advisors. We are dedicated to providing comprehensive accounting, tax, and business advisory services to clients throughout the Washington, D.C. Metro Area and the surrounding regions. With over a decade of experience, we have cultivated a deep understanding of our clients’ needs and aspirations. We recognize that our clients seek more than just value-added accounting services; they seek a trusted partner who can guide them towards achieving their business goals and personal financial well-being.
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