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If you made clean energy upgrades in 2023, it might be time to claim your tax credit

  • Rachel McDevitt
A plug used to charge an electric vehicle at H&H Chevrolet in Shippensburg.

Jeremy Long / WITF

A plug used to charge an electric vehicle at H&H Chevrolet in Shippensburg.

It’s the heart of tax season, which means it’s time for people who made clean energy upgrades around their home or bought an electric vehicle last year to claim a federal tax credit.

The Inflation Reduction Act gives taxpayers credit for 30% of the cost – up to a certain dollar figure – of rooftop solar panels, battery storage, high efficiency electric heat pumps, windows and home insulation, among other energy-saving upgrades. The products must meet energy efficiency standards set by Energy Star or other certifying agencies.

To claim the residential energy credits for items that were installed last year, people need to file an extra form with their taxes, the three-page Form 5695.

Those who bought new EVs in 2023 may be able to claim a credit of up to $7,500. A used EV bought last year could qualify the buyer for a credit up to $4,000. To claim that credit, filers need Form 8936.

EVs must meet several requirements to qualify for a tax credit. They need a battery capacity of at least 7 kilowatt hours, weigh less than 14,000 pounds, and be made by a qualified manufacturer. The suggested retail price cannot be more than $80,000 for vans, sport utility vehicles and pickup trucks and not more than $55,000 for other vehicles.

Used EVs must have been purchased from a dealer, cost $25,000 or less, and be a model year within the past two years.

People can check if a vehicle is eligible at fueleconomy.gov.

It may be easier to take advantage of incentives in 2024.

Pennsylvania is setting up rebate programs with IRA money for people to lower the up-front cost of home energy upgrades, instead of waiting for tax season, expected to be available in late 2024, said Department of Environmental Protection spokesperson Neil Shader in a statement.

“The Home Efficiency Rebates Program will allow states to incentivize whole-house energy savings retrofits for homeowners. The Home Electrification & Appliance Rebate Program will consist of point-of-sale consumer discounts on the purchase of high-efficiency electric home appliances,” he said.

New rules for 2024 let car dealerships check tax credit eligibility at the time of sale, so there are no surprises come tax season. Buyers can choose to transfer the credit to the dealer to get that amount deducted from the sale price.

Flora Cardoni with PennEnvironment said her group is trying to raise awareness of these benefits.

She said point-of-sale discounts will help make these upgrades more accessible to more people.

“We’re only going to see the reductions in climate pollution and the growth of clean energy that we need to see for our climate and health if people actually take advantage of all of these programs,” Cardoni said.

PennEnvironment has an online tool kit for making home upgrades that offers tips for doing a home energy audit and electrifying your home.

Cardoni recommends consulting with your contractor or installer to make sure home energy upgrades meet the federal standards for credits. It’s also good to save all receipts and documents in case they’re needed for your next tax return.

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