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IRS Issues Guidance for Home Energy Credit Requirements

S.J. Steinhardt
Published Date:
Aug 7, 2023


The IRS has issued guidance on claiming the energy efficient home improvement tax credit.

This credit was one of many clean energy credits created under the Inflation Reduction Act. In Notice 2023-59, issued on Friday, the IRS sets out the proposed regulatory requirements to claim the credit, the requirements for home energy audits under the relevant section of the Internal Revenue Code (IRC), as well as a transition rule for certain home energy audits conducted during tax years ending this year.

According to CPA Practice Advisor, the audit must include an estimate of the energy and cost savings to each improvement. Under Section 25C of the IRC, the maximum credit for home energy audits is $150, so taxpayers can claim a 30 percent credit on audits that cost up to $500, according to the IRS. The home energy auditor must provide a written audit report to the taxpayer.

The maximum amounts a taxpayer can claim each year are: $1,200 for energy property costs and certain energy efficient home improvements, with limits on doors ($250 per door and $500 total), windows ($600), and home energy audits ($150); and $2,000 per year for qualified heat pumps, biomass stoves, or biomass boilers.

Starting in 2024, taxpayers will need to demonstrate that a qualified auditor conducted their home audit. To satisfy this requirement, the IRS said that the written audit should state that the auditor is certified by one of the certification programs listed on the Department of Energy certification programs for the energy efficient home improvement credit page to conduct the home energy audit.

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