Welcome back to Ned’s blog spot, where you can find all the answers to your tax questions. We have good news this month on the blog. As you read in the title, the credit for adding energy-efficient improvements to your main residence is back and better than before.
According to the most recent tax letter by ‘The Kiplinger.’ “In the year 2022, the credit will apply to 10% of the cost of the following improvements: certain types of insulation, eternal windows, doors, and skylights. The credit will also include 100% of the cost of electric heat pumps and water heaters, some central air-conditioning systems, and similar energy-saving investments.” Don’t get too excited, it’s not a free for all. There will be a lifetime limitation of $500. Additionally, the credit will be capped for many items:
– No more than $150 for hot water boilers and furnaces
– $200 for a window
– $50 for a furnace circulating fan
Big changes are coming for tax years 2023-2032, the credit percentage increases to 30% of the cost, raising it 20% from tax year 2022. The lifetime credit limit of $500, will be replaced with a $1,200 annual limit. The annual limit increases to $2,000 for a biomass stove or hot water boiler, or an electric or natural gas heat pump. But we all know, what goes up, must come down; it’s science! In light of the increases in annual limits, there are some decreases as they relate to specific improvements and they are as follows: the annual limit will be lowered to $600 in relation to exterior windows and skylights, and $500 as it relates to exterior doors.
We hope you find this information helpful as you begin to prepare for the upcoming tax season. And as always, the information for our main office downtown will be listed as well. Don’t forget to check back for more!
Ned Jackson Downtown Office
255 N Liberty Street
Jacksonville, FL 32202