Yes, it is possible to receive a tax credit for your replacement windows. If you replaced your windows with qualifying energy-efficient windows, skylights, doors, or other qualifying items in 2022, you could be eligible for a tax credit.
An Important Note:
Federal tax credits and related qualification requirements for exterior windows and doors (under Section 25(C) of the Internal Revenue Code) change significantly for products placed in service after December 31, 2022, due to the enactment of the Inflation Reduction Act of 2022. The following information is only applicable to products placed in service in 2022 and subject to 2022 tax returns.
What Windows Qualify For The Tax Credit?
Under the Inflation Reduction Act of 2022, federal income tax credits for energy efficiency home improvements will be available through 2032. A broad selection of ENERGY STAR certified equipment is eligible for the tax credits.
The following energy-efficient home improvements are eligible for the Energy Efficient Home Improvement Credit:
- Exterior doors (30% of costs up to $250 per door, up to a total of $500)
- Must meet applicable Energy Star requirements
- Exterior windows and skylights (30% of costs up to $600)
- Must meet Energy Star most efficient certification requirements
- Insulation materials or systems and air sealing materials or systems (30% of costs)
- Must meet the criteria established by the International Energy Conservation Code (IECC) standard in effect at the start of the year that is two years prior to the Year the materials or systems are placed in service. For example, materials or systems placed in service in 2025 must meet the criteria established by the IECC standard in effect on January 1, 2023, to qualify for the Energy Efficient Home Credit in 2025.
Details of the Window Replacement Tax Credit
Through December 31, 2022, the energy efficient home improvement credit is a $500 lifetime credit. As amended by the IRA, the energy efficient home improvement credit is increased for years after 2022, with an annual credit of generally up to $1,200.
Beginning January 1, 2023, the amount of the credit is equal to 30% of the sum of amounts paid by the taxpayer for certain qualified expenditures, including (1) qualified energy efficiency improvements installed during the year, (2) residential energy property expenditures during the year, and (3) home energy audits during the year. There are limits on the allowable annual credit and on the amount of credit for certain types of qualified expenditures (see Q 1 and 2 below). The credit is allowed for qualifying property placed in service on or after January 1, 2023, and before January 1, 2033.
The residential clean energy property credit is a 30-percent credit for certain qualified expenditures made by a taxpayer for residential energy efficient property. The IRA extended the residential clean energy property credit through 2034, modified the applicable credit percentage rates, and added battery storage technology as an eligible expenditure. The credit applies for property placed in service after December 31, 2021, and before January 1, 2033. The credit percentage rate phases down to 26 percent for property placed in service in 2033, 22 percent for property placed in service in 2034, and no credit is available for property placed in service after December 31, 2034.