Maryland Energy Efficient Tax Credits for Homeowners

Energy-efficient homes are no longer something to wish for while watching futuristic shows like The Jetsons and Star Trek. Handfuls of home improvement projects exist today that can lower your carbon footprint, including upgrading your home’s insulation, installing energy-saving thermostats, switching to an electric air-source heat pump, and so much more. While some energy-saving solutions are minor enough to do yourself (like installing LED light bulbs in your home), others require a professional to ensure the work is done correctly and safely. 

There are many reasons why you should care about upgrading your home with energy-saving solutions. Environmentally, your upgrades can reduce greenhouse gas emissions and other pollutants and decrease overall water usage. Economically, improving energy efficiency can lower utility bills, create jobs, and help stabilize electricity prices. Unfortunately, some of the more complex home improvement projects involve rewiring your home, installing new appliances, and/or updating major elements of your home, which can result in higher costs. But thanks to the US government, a recently passed bill incentivizes homeowners to tackle these projects by offering tax credits up to $3,200 a year that you can claim now!

There are many elements to the federal law passed in August of 2022, but one of the more interesting points for homeowners to note is the promotion of clean energy. The law includes an energy-efficient home improvement credit that will make it more affordable for homeowners to transition their homes to clean energy. As of January 1st, 2023, the amount of credit is equal to 30% of the total cost of a home improvement project that meets the requirements listed in the document. A few examples of qualifying projects include: 

For a complete list of home improvement projects that qualify for this tax credit, check out the Energy Efficient Fact Sheet provided by the IRS. 

Tax credits can be claimed during the year that the projects are performed, and each year offers another opportunity to claim the maximum energy-efficient home improvement credit allowed (30 percent up to $3,200) for qualified home improvement projects. The final year homeowners can participate in this program is 2034, but the amount in which they can claim drops to 26 percent of projects completed in 2033 and 22 percent of projects completed in 2034.

We recommend you perform a home energy evaluation if you are unsure where to begin when claiming these tax credits. A home energy evaluation can help you understand the current energy usage of your home, identify possible areas where energy is being overused or wasted, and outline a plan to improve your home’s overall energy usage. There are 5 main areas to check first when conducting a home energy evaluation; download the DIY Home Energy Audit Checklist for a complete list of all areas.

Lighting: Switch out any standard light bulbs you have with LED light bulbs. They may cost more upfront, but you will use roughly 75% less energy with LED bulbs that last 25 times as long as standard ones, meaning you can save around $200 a year with this simple switch.

Seal Window and Doors: You can fix the most common causes of air leaks by checking all windows and exterior doors for drafts. Seal any cracks or gaps with caulk or weatherstripping.

Additional Air Leaks: Air can leak out of your home in a few other areas. Walk around and check pipes, baseboards, electrical outlets, and other elements to feel for drafts. Seal any gaps you find with appropriate caulk or weatherstripping material.

Insulation: According to the Department of Energy, a properly insulated attic can reduce your energy bill by 10 to 50 percent. Check your attic insulation for any signs of deterioration and check to see if there is enough insulation to meet today’s DOE recommendations. If you don’t have enough insulation, or your insulation is at least 10 years old, reach out to a professional attic insulator.

Check Your Appliances: One of the best things you can do to save energy in your home is to set up smart home automation, especially a smart thermostat, to help you control your energy use. Consider upgrading bigger appliances (air conditioners, washers, dryers, water heaters, etc.) to more energy-efficient options.

After completing your initial home energy evaluation with the DIY Home Energy Evaluation Checklist, give us a call. Our licensed and trained professionals will walk you through energy-saving opportunities in your home, help you select products and materials that meet the energy-efficient home improvement tax credit requirements, and do the job right the first time so you can collect your credit as quickly as possible.

Whether you’re looking to make a few upgrades, improve your home’s energy performance, or educate yourself on all of your options, the Inflation Reduction Act of 2022 provides an incentive to improve your home today and keep your energy consumption down in the future. If you are ready to tackle a home improvement project that is eligible for an energy-efficient tax credit, schedule a free consultation today.