Energy-Efficient Home Improvements

Replacing Windows

Updating and replacing old windows and skylights can improve the efficiency of your home and reduce the frequency at which you run the HVAC system. You could qualify for a credit of up to $600 based upon eligibility. Courtney Klosterman, home insights expert at the home insurance company Hippo, notes that you have to use specific equipment that’s included on the ENERGY STAR Most Efficient list to qualify for the credit.

Biomass Stoves

Biomass stoves aren’t cooking stoves—they burn biomass fuel to heat a home or water. Biomass fuel includes agricultural crops and trees; wood, wood waste, and residues (including wood pellets); plants (including aquatic plants); grasses; residues; and fibers. They’re similar to gas or electric fireplaces but better for the environment. Install a biomass stove that meets Energy Star’s requirements and you can receive up to a $2,000 credit. To qualify, a biomass stove must have a thermal efficiency rating of at least 75 percent. Costs may include labor to install.

Central Air Conditioners

Central air conditioners that meet strict energy efficiency guidelines set by the U.S. Environmental Protection Agency can qualify for the Energy Efficiency Home Improvement Credit. There’s a limit of $600 per item, and as a bonus, the costs of the electrical components needed to support residential energy property, including panelboards, sub-panelboards, branch circuits, and feeders, also qualify for the credit if they meet the National Electric Code and have a capacity of 200 amps or more.

Home Audits

If you’re trying to find ways to make your home energy efficient, a home energy audit for your primary place of residence may qualify for a tax credit of $150. However, there are certain criteria that need to be met first. The audit must:

• Include a written report and inspection that identifies the most significant and cost-effective energy efficiency improvements with respect to the home, including an estimate of the energy and cost savings with respect to such improvement.
• Be conducted and prepared by a home energy auditor or under the supervision of a qualified home energy auditor, if the person conducting the inspection is not one themselves.
• The written report must be prepared and signed by a qualified home energy auditor and be consistent with industry best practices.
• It must include the qualified home energy auditor’s name and relevant employer identification number (EIN) or other type of appropriate taxpayer identifying number if the auditor does not have an EIN, an attestation that the qualified home energy auditor is certified by a qualified certification program, and also the name of that program.

Important Update for Claiming Energy Efficient Home Improvement Credit in 2025

“Starting this year, the IRS is implementing a requirement for manufacturers to establish a PIN number for each eligible product, so that it can be associated with the tax credit claim,” explains Steber. However, since this is a fairly new requirement, manufacturers are currently in the process of becoming “qualified manufacturers” or QMs. Because of this, you can simply include the manufacturer’s four-digit QM code on your 2025 tax return—this applies to heat pumps (outdoor unit only), water heaters, CAC, boilers, furnaces, biomass stoves, windows, doors, and skylights. So, it’s important to note the QM code when filing your taxes this year.

Clean Energy Home Improvements

You can potentially qualify for the Residential Clean Energy Credit if you install new renewable energy properties in your home. The Residential Clean Energy Credit equates to 30 percent of the costs of new, qualified clean energy property for your home installed anytime from 2022 through 2032, and it phases down to 26 percent for property placed in service in 2033 and 22 percent for property placed in service in 2034. There is no dollar limit for this credit except for fuel cell properties (which are capped at $500 for each half kilowatt of capacity). If more than one person lives in the home, the combined credit for all residents can’t exceed $1,667 for each half kilowatt of fuel cell capacity.

Solar Panels

With an average savings of $1,500 per year on energy bills (around $125 per month), solar panels can cut homeowners’ costs drastically. With a standard electrical bill, you pay for the power you use. With solar panels, you store energy throughout the year, and if you don’t use as much as you store, there’s energy left over. When that happens, depending on your area, you may be able to sell that unused energy back to your town’s grid. That further increases the monetary savings households can achieve with solar power.

Solar Water Heater

Water heating is typically the highest utility expense in a home, and swapping your tank for a solar-powered water heater can not only improve your home’s efficiency, but it can also lower your utility costs.

Geothermal Heat Pumps

If you’re looking for a better way to heat and cool your home, consider a geothermal system. These pumps can help heat and cool your home more efficiently than traditional systems by transferring heat to the ground rather than generating heat. They do tend to be expensive, costing $15,203 on average (based on your location), and depending on unit size, system configuration, site accessibility, and more, you may pay anywhere from $4,541 to $26,610, according to Angi. But according to the Department of Energy, you can potentially see ROI in five to 10 years, depending on available financial incentives.

Battery Storage Technology

Similar to a generator system, battery storage technology helps store excess energy from clean energy sources to be used at a later time. This gives your home a reliable (and sustainable) energy source when the grid goes down or you’re facing a storm.

Historic Home Upgrades

Historic homes can qualify for this tax credit and other grants since many organizations wish to preserve historical buildings. “Taking advantage of these can help lower the financial burden of potential repairs while helping you maintain your home’s original beauty,” says Klosterman. Just note that sometimes, when you use a grant to preserve a historical building, there may be a clause that prevents you from doing further work on the home, adds Steber. It’s therefore very important to read the fine print prior to accepting a grant or applying for a tax credit under this stipulation.

Replacing Old Pipes

Upgrading or replacing old pipes may qualify for this tax credit and may be necessary to bring the home up to code and help prevent water damage. This can also be a chance to improve an older home’s energy efficiency.

Restoring Historic Elements

If your historic home features deteriorated finishings like beams, posts, stair railings, or other load-bearing elements that you plan on replacing, you may qualify for a tax break. The repairs must maintain the home’s original style and era, and be at least equal to the original’s load-bearing capabilities.

Replacing Stairs

Fully replacing a deteriorating set of stairs using the same or compatible substitute material can make your home safer and may qualify for this tax credit. The new set of stairs should look similar to the original.

Medically Necessary Upgrades

You can potentially include medically necessary home upgrades as a part of your medical expense deduction. These include improvements that help make your home more accommodating for a disability that you, your spouse, or dependents who live in your home may have. The amount you can include in your medical expense deduction depends on how the improvement impacts your home’s value.

According to Klosterman, “if your home’s value increases as a result of the improvement, your medical expense is considered the cost of the improvement minus the increase in home value,” she explains. “However, if your home’s value does not increase, you can include the entire cost in your medical expense deduction.”

However, many times, you will have to prove the upgrades were due to medical reasons, which is why it’s vital to keep a doctor’s letter when applying for your tax returns, adds Steber. Below are some examples of upgrades that could count.

Modified Smoke Detectors

For those with disabilities—blindness or hard-of-hearing—changing out your smoke detectors for ones that flash lights or emit louder noises can qualify. Smart monitoring systems, like water leak detectors, can also make it easier to detect issues early in hard-to-reach areas.

Ground Grading and Leveling

Grading, or leveling, the ground can improve accessibility and also help protect your home from water runoff. This includes lessening steep hills, adding ADA ramps, and creating more accessible pathways (flat stones instead of cobbles, etc.). It can also include work to help direct runoff away from your home and prevent standing water.

ADA-Compliant Modifications

Adding grab bars, handrails, and walk-in showers instead of tubs in your bathrooms can make your home a more accessible place to live, and could qualify for tax credits.

According to IRS Publication 523, to qualify as an improvement, the task must add value to your home, adapt it to new uses, or prolong its life. If repair-type work is part of the overall improvement, you may include it. However, not all repairs, like repairing a leak or patching a hole in drywall, necessarily add value, even though they do improve the quality of your home in the short term.

There’s a third category too. According to Klosterman, capital improvements are projects that extend your home’s life, add value, or refit your home for new uses. These differ from home repairs, which upkeep your home but don’t necessarily add value (like fixing a leak). Although you won’t see tax benefits from these improvements right away, these projects can help proactively protect your home by getting ahead of potential issues and lessen the amount of tax you pay when you sell your home.

Home Office Repairs

If you’re working from home, you may be able to deduct home office repair expenses, including repairs and maintenance, if you have a dedicated part of your home that you regularly use as your main place of business. Steber notes, “This doesn’t count if you have an office you go to as an employee, as it needs to be your own business or its equivalent. Simply working from home wouldn’t count on your tax return.”

The amount you can deduct depends on whether the project impacts the entire home or just the office. Home office improvements, however, are not tax deductible as they are classified similarly to capital improvements. These are some examples of qualifying home office repairs:

• Installing a full home security system. You can potentially deduct the cost of maintaining and monitoring the system that relates to the business part of your home.
• Repairing damaged outlets and wiring may be tax deductible.
• Replacing your home office windows with dual- or triple-pane windows to help improve insulation and reduce noise. In addition to the tax benefits you may enjoy when you sell your home, this improvement can help lower the need for cooling and heating, therefore lowering the strain on your HVAC system.

If you rent out a part of your home, you may be able to deduct repair expenses from the amount of taxable rental income you receive. Limitations apply, such as if you’re renting a space in your current residence. These are some qualifying examples:

• Repairing leaks in your tenant’s bathroom
• Addressing air leaks in your tenant’s area, which can help improve insulation. You can do so by updating the weather stripping around windows and doors
• Routinely checking the air vent(s) in your tenant’s part of the home, which can improve your chances of catching airflow issues, including dirty vents or leaky ducts, before they cause damage

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Kate McGregor is House Beautiful’s Digital Editor, writing in-depth , design inspiration stories, and . With over five years of experience writing commerce and search-optimized content for brands like Domino, Real Simple, and Architectural Digest’s Clever, Kate has developed a passion for uncovering the personal stories that often lie behind the inspiration for people’s spaces. She previously worked as the assistant market editor at ELLE Decor where she identified top products and brands in the industry and interviewed emerging designers about their thoughts on the latest . Kate holds a bachelor’s degree from Belmont University. When not researching the specificities of begonia plant care, you can find Kate scouring vintage markets for the ideal wrought-iron chair, knitting yet another cardigan, or reading historical nonfiction.