Technically no, but they do qualify you for a tax credit—up to $500.

Did you know that investing in energy-efficient windows can save you money on taxes?

It’s true, because of the new Inflation Reduction Act of 2022. Thanks to this new law, investing in certain energy efficient home improvements makes you eligible for hundreds of dollars in tax credits.

What’s the Inflation Reduction Act of 2022?

The Inflation Reduction Act of 2022 has roots in 2021, when Rep. John Yarmuth introduced the Build Back Better Act. The Build Back Better Act underwent some changes and revisions before being reintroduced to Congress. It had been renamed the Inflation Reduction Act by the time it passed the Senate—with amendments—in August 2022. 

The goal of the Inflation Reduction Act is to curb inflation via a few key strategies:

  • Deficit reduction.
  • Prescription drug price reduction.
  • Clean energy and domestic energy investments.

The Act also covers some modernization efforts for the Internal Revenue Service (IRS).

How do the tax credits work?

First, let’s talk about the difference between a tax credit and a tax deduction.

  • A tax deduction is any expense that you do not have to pay taxes on. For example, any money you spend on medical expenses is considered tax deductible. That money is not included when calculating what you owe.
  • A tax credit is, in simplified terms, money deducted from what you owe. For example, if you have kids, you may receive a child care tax credit of $8000. A $8000 tax credit doesn’t change how your taxable income is calculated. It simply subtracts $8000 from what you owe. It’s like receiving a gift card for the IRS.

Under the Inflation Reduction Act, some home improvement expenses that boost the home’s energy efficiency are eligible for tax credits. This includes:

  • Geothermal heating systems.
  • Solar panels.
  • Energy-efficient doors and windows.
  • Biomass stoves.
  • Metal or asphalt roofs.
  • Many others.

If you buy and install energy-efficient windows by December 31, 2022, you’re eligible for a tax credit. Specifically, you’re eligible for a tax credit of 10% of the cost, up to $500. The limit used to be $200, so this is great news for homeowners.

However, these numbers only apply through the remainder of 2022. Starting in 2023, the benefits become even more attractive. You could receive a tax credit for 30% of the cost of new windows, up to $600. If you spend as little as $2000 on energy efficient windows, you’ll recoup $600 via a tax credit.

What are the other benefits of energy-efficient windows?

Energy-efficient windows offer countless benefits for homeowners.

For starters, these windows are specifically engineered to prevent air from leaking into and out of the house. For example, on a summer day, your energy-efficient windows keep out that hot air. This saves your air conditioner from having to work double-time to keep you cool and comfortable. The reverse is true in winter: Your heater isn’t constantly fighting against frigid air leaking in through old windows. As a result, your energy bill is lower. 

That’s not the only way energy-efficient windows can put money back in your pocket. Energy-efficient windows can boost your home’s resale value. According to Remodeling Magazine, you can recoup 67% of the cost of energy-efficient windows when you sell.

The aesthetic benefits are appealing, too. Energy-efficient windows are often made from vinyl materials. Vinyl is tough, easy to clean, and highly customizable, plus you can get the exact color, style, and look you want. Vinyl also happens to be a great insulator and can cut down on outside noise disrupting your peaceful evening.

Now is the time to take advantage of the tax credit before the end of the year. You can find out more here

Call us today to discuss your replacement window options.