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The Inflation Reduction Act of 2022 offers a boost to Americans aiming to enhance their homes’ energy efficiency. Through federal tax credits and deductions, it’s easier to lower energy costs and consumption.
Until 2032, homeowners can deduct up to $3,200 annually from their federal income taxes for energy-efficient upgrades. This includes a 30% credit on costs up to $2,000 for heat pump equipment installations and an additional credit up to $1,200 for other eligible improvements, all within the same tax year.
The U.S. Internal Revenue Service (IRS) oversees these credits. Homeowners can claim them on their federal tax returns for the year the upgrades were completed, using IRS Form 5695 (refer to its instructions for guidance).
This opportunity is available for improvements made to your primary residence. It does not extend to new constructions or properties owned by landlords or other non-resident property owners.
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