The Section 45L tax credit offers a compelling financial advantage for those who invest in energy-efficient construction and renovation. Claiming this credit can result in significant savings on your tax bill.
The credit amount is up to $5,000 per eligible dwelling unit for new energy-efficient homes. The credit is available to the property owner or developer who constructed or renovated the property, not to the eventual homebuyer.
The following energy-efficient buildings leased or sold through qualify for the Section 45L tax credit:
| HOME TYPE | REQUIREMENTS | PREVAILING WAGES | 2023 & BEYOND |
|---|---|---|---|
| Single Family | Energy Star | No | $2,500 |
| ZERH | No | $5,000 | |
| Manufactured Home | Energy Star | No | $2,500 |
| ZERH | No | $5,000 | |
| Mutlifamily | Energy Star | No | $500 |
| ZERH | No | $1,000 | |
| Mutlifamily | Energy Star | Yes | $2,500 |
| ZERH | Yes | $5,000 |
ENERGY STAR, a program by the US Environmental Protection Agency (EPA), acts as a benchmark for energy-efficient products and homes. It is a trusted mark of quality, signifying that a home meets specific energy performance standards established by the EPA.
The 45L tax credit and ENERGY STAR work hand-in-hand. By building homes that meet ENERGY STAR standards, builders can become eligible for the tax credit.
ENERGY STAR certified new homes are energy efficient by design, with savings that start now and continue into the future. Better systems and construction features make all the difference throughout your home. ENERGY STAR certified homes are at least 10 percent more energy efficient than standard new homes built to code—and even more efficient when compared to existing homes.
45L Energy Efficient Home Credit rewards builders and homeowners for constructing or substantially renovating energy-efficient homes.
The tax credit could be in the range of $500 – $5000 per unit for dwelling units placed in service starting from 2023.
Builders and developers who construct or renovate residential properties.
Single-family detached homes, townhouses, duplexes, condominiums, garden-style apartments, assisted living facilities, manufactured homes, and student housing meeting specific energy efficiency standards.
The Inflation Reduction Act extended the tax credit to homes acquired (leased or sold) between January 1, 2023, and December 31, 2032.
Yes, although the credit amount is $2,000 per unit for single-family and multi-family projects (3 stories or less) or $1,000 per unit for manufactured homes.
Typically, the builder or developer who have basis during construction claim the credit.
File Form 8908 with your tax return. Certification by a qualified individual is a requirement.
You can claim the credit in the year your home is acquired (leased or sold).
Yes, you’ll need an energy certification by an eligible certifier and proof of compliance with program requirements.
Credits range from $500-$5,000 per dwelling unit depending on certification and prevailing wage requirements.
Only substantial renovations that meet specific energy efficiency improvements qualify.
Homes must meet either ENERGY STAR or DOE Zero Energy Ready program requirements to qualify between 2023 – 2032.
Yes, in some cases, but consult a tax professional for potential interactions.
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