You can deduct 30% of your weatherization materials expenses (up to $1,200) from your federal taxes. However, there are caps on specific categories of spending:

• Insulation and air sealing: $1,200
• Doors: $250 per Energy Star rated door, up to $500
• Windows: $600 for Energy Star rated windows
• Energy audit: $150
• Electrical panel upgrade: $600 if done in conjunction with and to enable a heat pump or heat pump water heater install

The tax credit resets each year, so if you need to do a lot of weatherization work, consider spacing it out over several years.

NOTE: This tax credit only includes materials, not labor costs. Ask your contractor to give you an itemized invoice!

Examples

To illustrate how this works, here are a few examples.

‍Home #1

‍Homeowners start with an energy audit to find out what weatherization projects they need to do. They learn that their attic needs insulation, and they need to replace their front door because it's letting lots of heat escape.

Home #2

‍Homeowners already know where their problem areas are: they need to replace their living room windows. Additionally, they need to add some air sealing around the windows upstairs and re-insulate the envelope of their home. They choose to break the project up across two years.

In year 1:

‍

In year 2:

‍

How to claim the credit

If your federal tax liability is less than the credit amount, you only claim the amount you owe.

For example, if you only owe $500 in federal taxes, you can only claim $500, even if you qualify for the full $1,200. Unfortunately, the credit does not roll over.

You can read more about how tax credits work.

To claim the tax credit, you'll fill out Form 5695 with your federal taxes.