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Can energy efficient windows be claimed on taxes?

If you make a purchase of energy efficient windows or doors from DunRite between 2023 and 2032, you may be eligible to claim a credit on your taxes that’s worth thousands of dollars—up to 30% of the cost to a maximum of $1,200 (or $600, if you only purchase windows) per year.

How? Thanks to the Inflation Reduction Act of 2022.

Energy Efficient Home Improvement Credits

Formerly known as the Residential Energy Property Credit, the new Residential Clean Energy Credit falls under the Inflation Reduction Act with fresh modifications designed to fight greenhouse emissions and reduce energy use. It’s all about energy efficient home improvements for residential properties.

The biggest improvement is the new annual cap of $1,200, which replaces the former taxpayer lifetime limit of only $500 for this credit. It can now be claimed annually, each year improvements are made, assuming they meet the program’s criteria.

More good news? You aren’t penalized for partial window replacements, such as replacing half of your windows one year, and the other half the following year, or if you replace the front door one year, and patio doors the next. It also means you might get twice the credit if your installation started in December, but completed in January. After all, it’s based on installation date, not the date you signed the contract or paid the invoices. And the $1,200 cap is annually, not a total for the entire 10-year program.

Tax credits cannot exceed 30% of the cost of the windows and/or door(s) purchase, excluding installation. You must reasonably expect to use the new windows or doors for at least five years after the installation, and it must be your primary residence.

The Inflation Reduction Act also provides a substantial grant to states for their own energy efficiency programs, too, so be sure to check arizona.gov for new residential homeowner tax credits related to windows and/or doors before filing your taxes. It’s possible there may be additional credits to claim on your state income tax filing.

Visit this IRS FAQ page on this tax credit to learn more.

What products qualify?

Since the tax credit is an incentive for homeowners to become more energy efficient, product must meet or exceed the Energy Star 7.0 program requirements to qualify for the tax credit. Windows have an additional requirement; they must meet the Most Efficient recognition.

Windows must have Energy Star’s Most Efficient recognition, which includes a U-Factor of ≤ 0.21 for insulation and SHGC of ≤ 0.21 to block solar heat gain, along with a North American Fenestration Standard (NAFS) Performance Grade of ≥ 15. During an in-home appointment, your salesperson can help you understand which products meet this criteria, and ensure you have enough information to make an educated decision about which product best suits your needs.

What is the NAFS Performance Grade? It ensures the window (or door) is structurally sound; resistant to air, wind and forced entry; and easy to operate.

Installation of a qualifying product can be a replacement window or door, or installation where there wasn’t one before, such as for a newly created wall opening or home addition. Big sliding glass doors and moving wall systems qualify, as long as the product installed can meet the Energy Star requirement.

All qualifying products must be installed on the exterior of the home, so interior doors do not qualify.

How much can I get?

In terms of dollars and cents, you’d get a tax credit up to $600 for windows and $250 per exterior door up to a total of $500, with a total credit cap of $1,200 per year. This cap can include other qualified energy efficiency improvements, too, such as insulation, heat pumps and air sealing, HVAC units, water heaters, electrical improvements and more.

Some homeowners might even want to spread those purchases out over time for maximum dollars back. Windows this year, doors next year, your AC unit the year after that… you could potentially collect those tax credits year after year, depending on what you need replaced.

Unlike a rebate, the money isn’t mailed to you, it comes directly off the balance of the taxes owed. It’s a credit to offset what you pay.

How to I claim the credit?

When filing your taxes, use IRS IRS Form 5695 to calculate and claim the credit. You’ll need the size of each window and/or door installed to calculate square footage, and a copy of your purchase receipt from DunRite.

Can I apply this tax credit to a second home?

To qualify for this tax credit, installation must be done at the homeowner’s primary residence. Second homes aren’t eligible; neither are new construction or rental properties. However, these may fit criteria of other programs under the Inflation Reduction Act.

Are there other credits or rebates my purchase may be eligible for?

This is the only tax credit program we’re aware of, along with anything the State of Arizona might offer; however, utility companies often offer rebates, too. You’ll want to check any that apply to your service area. In Arizona, these include APS, SRP and Southwest Gas.

Currently, Southwest Gas, APS and SRP do not offer any rebates for energy efficient windows or doors. We did find one resource that might be useful to bookmark, though, called the Energy Star Rebate Finder. It allows you to search for Energy Star rebates by zip code, including windows/doors and other products.

We hope this information is helpful! If you have questions, don’t hesitate to reach out to us on Facebook.

Last Updated Oct. 30, 2023

 
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Please note that we install replacement windows and doors, but we don’t repair them or replace broken glass. Three-item minimum purchase, some doors excluded. Refer to our FAQ and warranties page for details.

 

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