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To promote energy efficiency federal and state governments implemented a number of attractive incentive programs. We offer guidance to our customers in applying for these benefits. Some incentives may be combined. Some programs have no income restrictions and others have even more benefits for lower income families. The incentives are substantial and straight forward to obtain when you work with a knowledgable contractor and meet the qualifications.
This tax incentive seeks to make homes more energy efficient and is a part of the Inflation Reduction Act of 2022, Section 25C of the Internal Revenue Code. It applies to insulation upgrades made on or after January 1, 2023 and the credit is available annually through December 31, 2032. It is also known as Energy Efficient Home Improvement Tax Credit or EEHITC.
Adding insulation and air sealing to your home will lower energy costs and contribute to a clean energy future. To sweeten the deal, the federal government is offering a significant tax credit which can cut as much as $1,200 off your tax bill each year when you undertake a qualifying project. A tax credit is an amount of money that taxpayers can subtract from their income taxes and can be carried forward to the next year if no tax was due in the year of the project.
This tax credit is equal to 30% (up to $1,200) of the amount paid by the taxpaying homeowner for qualified energy efficiency improvements installed during each year. These improvements include insulation and air sealing materials. The credit does not apply to labor/installation costs.
Homeowners have the option to file a claim for the 25C tax credit every year. This means a homeowner could upgrade insulation in their attic this year and in their basement or crawlspace next year and claim the full tax credit each year. The credits have no lifetime dollar limits. Homeowners may claim the maximum annual credit every year that eligible improvements are made, through 2032.
All taxpaying homeowners are eligible. The home must be owned and used by the taxpayer as their principal residence. The tax credit is not applicable to a newly constructed home. Homeowners who have no tax liability are not eligible for the tax credit.
A tax credit reduces the federal tax owed, dollar for dollar and is more valuable than a tax deduction, which only reduces the amount of taxable income. Suppose you prepare your tax return and owe $3,000. If you qualify for a $1,200 tax credit, then you will only owe $1,800. If you prepaid all $3,000 of your taxes during the year, then you would receive a refund of $1,200. If you did not prepay, you will owe $1,200 less in taxes. Either way, it is a real dollar incentive.
If you do not have sufficient tax liability in the project year, you can carry forward any excess credit and apply it to reduce the tax you owe in future years.
In addition, you may also be able to qualify for an even larger rebate incentive through EnergizeCT and benefit from both incentives.
For more information schedule a free insulation evaluation and we will guide you through the process.
Energize Connecticut is an initiative dedicated to empowering Connecticut to make smart energy choices.
It is an initiative of the Energy Efficiency Fund, the Connecticut Green Bank, the State, and local electric and gas utilities. The initiative has funding support from a charge customer’s energy bills.
Residential customers of Eversource, UI, CNG, and SCG in Connecticut are eligible for a Residential Insulation Incentive.
Customers may receive up to $1.70 per square foot or 75% of total cost, whichever is less, up to $10,000 on approved insulation projects recommended by a Home Energy Solutions contractor. The existing and installed insulation must meet certain program requirements to qualify for the rebate.
The rebate is $1.70/sqf for walls, attic floors, floored over attics, garage ceilings and rim joists. The rebate is $0.80/sqf for basement ceilings.
Any insulation installed using the Energize Connecticut rebate must be installed by an approved contractor participating in the CT Insulation Installers Network.
This program is for single-family homes and multifamily buildings of up to 4 units. If you live in an apartment building with more than 4 units, please ask us about EnergizeCT Multifamily Initiative.
If you are renting, you will need your landlord’s approval before scheduling your Home Energy Solutions visit.
If your family’s combined gross annual income is below the state’s 60 percent income median, you may qualify for a no-cost Home Energy Solutions – Income-Eligible (HES-IE) program, and additional incentives including up to 100% of the cost of insulation.
For more information schedule a free insulation evaluation and we will guide you through the process.
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