Renewable Energy Tax Credits

Geothermal heat pumps are similar to ordinary heat pumps, but use the ground instead of outside air to provide heating, air conditioning and, in most cases, hot water. Because they use the earth's natural heat, they are among the most efficient and comfortable heating and cooling technologies currently available.

Requirements

Must meet the requirements of the ENERGY STAR program which are in effect at the time of the expenditure. Tax credits includes installation costs.

The home served by the system does not have to be the taxpayer's principal residence.

Water-to-Air	Water-to-Water	Direct Expansion
Closed Loop:	Closed Loop:	EER >= 16
EER >= 17.1	EER >= 16.1	COP >= 3.6
COP >= 3.6	COP >= 3.1
Open Loop:	Open Loop:
EER >= 21.1	EER >= 20.1
COP >= 4.1	COP >= 3.5

Definitions: 

• COP (Coefficient Of Performance) - of a heat pump is the ratio of the change in heat at the "output" (the water reservoir of interest) to the supplied work.
• EER (Energy Efficient Ratio) - The higher the EER rating, the more energy efficient the equipment is. This can result in lower energy costs. This DOE site can show how to calculate potential energy costs savings of a more efficient unit.

More Information

• How to apply
• Geothermal Heat Pump FAQ
• All ENERGY STAR geo-thermal heat pumps qualify for the tax credit
• What about water-to-water geothermal heat pumps?

A wind turbine collets kinetic energy from the wind and converts it to electricity that is compatible with a home's electrical system.

Requirements
Must generate no more than 100 kilowatts of electricity for residential use. 

Tax credits includes installation costs.

The home served by this system does not have to be the taxpayer's principal residence.

More Information

• How to apply

Solar Water Heaters

Solar water heaters come in a wide variety of designs, all including a collector and storage tank, and all using the sun's thermal energy to heat water.  Solar water heaters are typically described according to the type of collector and the circulation system.

Requirements

At least half of the energy generated by the "qualifying property" must come from the sun.  The system must be certified by the Solar Rating and Certification Corporation (SRCC) or a comparable entity endorsed by the government of the state in which the property is installed.

Note:  The credit is not available for expenses for swimming pools or hot tubs.  The water must be used in the dwelling.

Photovoltaic systems must provide electricity for the residence, and must meet applicable fire and electrical code requirements.

Tax Credit includes installation costs.

The home served by the system does not have to be the taxpayer's principal residence.

More Information

• How to apply
• All ENERGY STAR Qualified solar water heaters qualify for the tax credit

Solar Panels (Photovoltaic Systems)

Solar Panels or Photovoltaic Systems are solar cells that capture light energy from the sun and convert it directly into electricity.

Requirements

Photovoltaic systems must provide electricity for the residence, and must meet applicable fire and electrical code requirements.

The home served by the system does not have to be the taxpayer's principal residence.

More Information

• How to apply

Fuel cells are important enabling technology for the hydrogen economy and have the potential to revolutionize the way we power our nation, offering cleaner, more-efficient alternatives to the combustion of gasoline and other fossil fuels.

Requirements

Tax Credit includes installation costs.

The maximum credit is $500 per half kilowatt (kW) of power capacity.

The fuel cell  must have a nameplate capacity of at least 0.5 kW of electricity using an electrochemical process and an electricity-only generation efficiency greater than 30%.

The home served by the system MUST be the taxpayer's principal residence.

In case of joint occupancy, the maximum qualifying costs that can be taken into account by all occupants for figuring the credit is $1,667 per 0.5 kW. This does not apply to married individuals filing a joint return. The credit that may be claimed by each individual is proportional to the costs he/she paid.

More Information

• How to apply

Biomass stoves burn biomass fuel to heat a home or heat water. Biomass fuel includes agricultural crops and trees, wood and wood waste and residues (including wood pellets), plants (including acquating plants), grasses, residues, and fibers.

**New for 2021:

Beginning in 2021, if you purchase and install a wood or pellet stove or larger residential biomass heating system with a Thermal Efficiency Rating of at least 75%, you will be able to claim a credit that is uncapped and based on the full cost (purchase and installation) of the unit, in the amount of:

• 26% for systems placed in service between 01/01/2021 through 12/31/2022
• 22% for systems placed in service between 01/01/2023 and 12/31/2023.

The credit must be claimed on the tax return for the year the product installation is completed. Therefore, any product purchased in 2020 that qualifies for the new credit, but is not installed until 2021, should be claimed on your 2021 tax return.

Requirements:
Thermal efficiency rating of at least 75%

More Information
**How to apply (as this credit is new for 2021, we do not have the IRS Forms that reference it at this time. These forms will likely be released in January 2022 and we will provide the new link at that time.)

Wood Burning Efficiency & Safety