Law Ends Energy Efficiency Tax Credits for PA Homeowners
Passed in July of this year, the One Big Beautiful Bill Act (OBBBA) has slashed key energy efficiency tax credits. These clean energy credits, originally expiring in 2034, are ending at the end of this year! So if you were thinking of using these credits to save on your federal taxes, then you don’t have long to do it. Here’s what you can do to install energy efficiency upgrades in your home before the deadline, as well as how to find a better electricity rate.
Home Upgrades Covered by the Energy Tax Credits
Two main credits are on the chopping block: the Energy Efficient Home Improvement Credit (Section 25C) and the Residential Clean Energy Credit (Section 25D). The first offers 30% back on certain energy efficient home improvements. These include new windows, improved insulation, or home energy audits. The second offers 30% back for installing solar panels, wind systems, geothermal heat pumps, or biomass energy equipment. With both credits ending December 31, now’s the time to do them!
Home Upgrades You Can Do Before the Deadline
To qualify, home improvements must meet energy efficiency standards. They must also be all new parts or systems, nothing used. In addition, the total limit for an efficiency tax credit in one year is $3,200. So choose your upgrades with this in mind!
Heating and Cooling Upgrades
HVAC upgrades, as well as heat pumps, both can qualify for the tax credits if you go through a professional installer. Heat pumps, including installation, average around $11,545. And the tax credit will cover up to $2,000 of these costs. For HVAC replacement, costs can also vary widely depending on the system you choose and the size of your home. However, you can only claim $600 for HVAC upgrades.
Water Heating
Natural gas, propane, or oil water heaters, as well as heat pump water heaters, all qualify for tax credits. While you technically can install your own water heater in PA, many areas require permits and inspections to make sure everything is up to code. For heat pump water heaters in particular, a professional is recommended. Again, costs can vary widely, between $600-$3,000 with installation. While you can claim up to $2,000 for a heat pump water heater, other types will only net $600 worth of tax credits.
Insulation Upgrades
Also covered under the tax credits are what they refer to as “building envelope components”. This covers exterior doors and windows, skylights, and even insulation. However, the credit doesn’t cover labor costs so it’s a perfect DIY option! The tax credit for doors is limited to $250 per door and $500 total. Windows and skylights will net you a total $600 credit. Lastly, insulation and air sealing materials have a limit of $1,200.
Solar Tax Credit
Technically, it’s not too late to get the solar tax credit, but be ready for delays. To get the credit, your system must be fully installed, approved by your utility, and generating power before the deadline. And with many others seeking to claim the home energy credit, companies are scrambling. If you want a consult, schedule it as soon as possible!
Save on Energy in PA
If you want to save money, make sure to take advantage of these tax credits before they expire. But if you really want to save even more, shop for a cheaper electricity plan. Compare plans, read reviews, and more. Visit https://www.paenergyratings.com