Warm Home, Cool Tax Benefits

Workman installing a new window.

Baby, it’s getting cold outside! It’s time to have your home heating system serviced to ensure everything is working properly before use kicks into high gear. However, it might be worth your while and be advantageous from a tax perspective, to consider an upgrade instead.

Getting a new, more energy-efficient heating system can benefit you at tax time in a few ways, primarily through tax credits for energy-efficient home improvements.

The federal government offers tax credits designed to incentivize homeowners to make environmentally friendly improvements, such as installing a new, energy-efficient heating system. Other improvements to consider are installing new doors and windows, replacing insulation, improving weatherization, and replacing older water heaters.

Credits typically cover a percentage of the cost of qualified equipment and its installation, up to certain limits. The type of equipment used and how efficient it is are also factors to consider.

Credits for making energy-efficient improvements will directly reduce your tax liability, potentially leading to a lower tax bill or a larger tax refund. You’ll also have the added benefit of paying less on your utility bills throughout the year.

Tax laws change nearly every year and eligibility criteria vary based on the type of equipment, your income, and the year of the upgrade. It’s crucial to consult with a tax professional to ensure that you qualify and that you’re taking full advantage of any available tax benefits.

While there may not be enough time this year to finalize larger projects, smaller upgrades can be completed in enough time to benefit you in the upcoming tax season. And there is ample opportunity to explore what projects will be a benefit in 2024.

A qualified CPA can guide you to make wise choices that enhance your comfort and save you money.

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