Reconsider Home Energy Credits
In 2022, Congress expanded and extended tax credits for individuals who make a broad range of energy-efficient improvements to their homes. Unlike tax deductions that lower income, a tax credit is typically a dollar-for-dollar reduction of tax. The credits fall into two categories. Residential Clean Energy Credits are typically for bigger-ticket items like solar, wind, and geothermal power generation; solar water heaters; and battery storage (including battery backup systems). This credit covers up to 30% of the cost of allowed improvements, with no annual or lifetime maximum. For other less expensive improvements, the 2022 extension created the Energy Efficient Home Improvement Credit. Among other things, it applies to home insulation, windows and skylights, central air conditioning, and heat pumps. Annual maximums total up to $3,200, but there are no lifetime limits (continues through 2032).
Buy an Energy Efficient Vehicle
If you purchase a new or used electric, hybrid, or fuel cell vehicle during 2024, you may qualify for an Energy Credit for Vehicles. For qualifying new personal use vehicles, the credit can be up to $7,500. For used vehicles, the credit can be up to $4,000. All-electric, plug-in hybrid, and fuel-cell electric vehicles purchased new in 2024 may be eligible for a federal income tax credit of up to $7,500.The availability of the credit will depend on several factors, including the vehicle’s MSRP, its final assembly location, battery component, and/or critical minerals sourcing. Check https://fueleconomy.gov/feg/tax2023.shtml for eligible vehicles. Also, your modified adjusted gross income (MAGI) cannot exceed certain limits ($300,000 for married, $225,000 for head of household, and $150,000 for all others) to qualify. Determining if a vehicle qualifies for these credits is complicated, and a buyer should check with the dealer for eligibility and documentation. Credits are also available for business-use vehicles.