You’ve probably heard the many benefits that come from investing in renewable energy resources. But what you might not have heard about yet is the energy efficiency tax credit that is made available to those who make or have made the commitment to renewable energy.

Taxpayers who decide to improve their home energy efficiency, or who decide to use renewable energy (if available to them), may be eligible for federal tax credits. According to TurboTax, “As of the 2017 tax year, the federal government offers two such credits: the Residential Energy Efficiency Property Credit and the Nonbusiness Energy Property Credit.”

There’s more than one reason why you should look into an energy efficiency tax credit.

The Energy Policy Act of 2005 is what began the tax credit program for energy improvements to existing homes. It was initiated as a means to improve homeowners’ bills, while also helping to reduce greenhouse emissions. The credit has been limited various times, in the sense that it was only going to be offered for a couple of years, but bipartisan acts such as The Bipartisan Budget Act of 2018, extend the tax credit so that more homeowners can take advantage of the program.

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If you’re a homeowner, you can receive a tax credit worth 10 percent of your cost for upgrading the efficiency of your home’s envelope. If you invest into renewable energy resources such as solar panels, then your credit will be equal to 30 percent of the cost, including installation.

tax files

Now in case you were wondering, a home’s envelope is the shell of the building that’s made up of all the barriers that came from construction. These barriers are working together to accomplish four things, control moisture, provide structural support, regulate temperature, and control your air flow, per Echo Tape.

Upgrading your home’s envelope may seem like a tall task to ponder, but it is one worth the investment. Not only because of the tax credit you can receive, but also from the long-term benefits you’ll receive on your reduced monthly energy bill. In order to receive the tax credit – which is capped at $500 for all improvements – the improvements made have to meet the prescriptive requirements which were established over ten years ago under the 2009 International Energy Conservation Code.

You can also be eligible for the tax credit if you purchase qualified residential energy efficient appliances. The tax credit you’ll receive is usually equal to the full cost of the appliance, unless that specific appliance has a cap. Furnaces, water heaters, AC units, and stoves are the main appliances you need to look at in order to max out your tax credit. After you’re done reading this article, head to, for more information on the specific upgrades you’ll need to complete.

How solar can play a factor in your decision.

solar panels

As we mentioned before, the credit you’ll receive from solar, wind, or geothermal equipment is up to 30 percent of the cost. Fortunately, tax credits are also available for homeowners that purchased solar panels back in 2015 and 2016. The benefits behind solar panels are quite extensive under the energy tax credit. According to an article from The Balance, “These tax credits are available for energy efficient purchases made in 2016, as well as retroactive to purchases made in 2015. Solar panels added to your home are good through 2019 and are then reduced each year until end-of-year of 2021.”

Investing into energy efficient appliances such as those from Energy Star will go a long way towards maximizing your tax credit. The best decision will be when you finally combine these upgrades with renewable energy sources.