- 2017-2019: 30% of cost
- 2020: 26%
- 2021: 22%
- 2022: zero
New data from the IRS for tax year 2014 (the most recent available) has revealed how taxpayers are using these residential energy credits since 2012, with breakouts for 25C and 25D, respectively.
As in prior years, windows were the most common means for using the 25C credit.
In terms of costs claimed, however, qualified insulation improvements made up the largest share of the total.
In 2014, 705,000 taxpayers claimed a 25C credit via window upgrades connected to a total dollar value of $1.1 billion of improvements; the same amount was claimed by just 207,000 taxpayers for energy-efficient roof upgrades. After across-the-board increases in claims from 2012 to 2013, all categories of improvements experienced declines in 2014. These year-over-year changes occurred in terms of total installation costs claimed as well as returns filed.
A total of $4.57 billion of energy-efficient upgrades was claimed for credit calculation purposes on tax forms filed by 3.1 million taxpayers in 2014, yielding a total credit amount of $520 million (inclusive of carryforwards and the $500 lifetime cap).
The story of 25D is more mixed. While claims related to solar electric, solar water heating, and small wind energy property costs increased in 2014, those for costs related to geothermal heat pump fuel cell property dropped sharply. From 2013 to 2014, claims associated with solar electric power grew by 33,000 taxpayers and $381 million. Conversely, during the same period, 25D claims related to geothermal heat pumps fell by 5,000 taxpayers and $123 million, declines of 8% and 13%, respectively.
By far, the most commonly claimed qualifying activity for the 25D credit in 2014 was for solar electric property. Nearly 200,000 taxpayers claimed the credit for a total of almost $2.5 billion in qualifying costs of installation. The second most common installation in 2014 was for solar water heating property, which was claimed by 77,000 homeowners and totaled almost $276 million in installation costs. Despite the substantial decrease in costs associated with geothermal heat pumps, they still make up the second-largest share of total installation costs ($806 million) by a wide margin.
Including 154,000 returns using carryforwards of unclaimed credits, more than 400,000 taxpayers claimed a 25D credit in 2014. In total, $3.6 billion in 25D-qualifying installations were made in 2014, yielding credits totaling $1.1 billion.
Despite the changes associated with their use, the tax credits have been claimed in connection with billions of dollars of energy-efficient upgrades and new home features.
This post brought to you by NAHB Eye on Housing - April 2017