The Department of the Treasury and the Internal Revenue Service (IRS) have released Revenue Procedure 2024-31 and proposed regulations that offer guidance on the Energy Efficient Home Improvement Credit.
This revenue procedure outlines the steps and requirements for manufacturers of certain energy-efficient products to become qualified manufacturers (QMs). To achieve QM status, manufacturers must:
1. Register with the IRS and sign an agreement.
2. Assign a unique product identification number (PIN) to each qualifying item.
3. Label these items with the assigned PINs.
4. Provide periodic reports to the IRS detailing the assigned PINs.
The IRS will soon launch the IRS Energy Credits Online Portal (IRS ECO), a free, secure, electronic platform that manufacturers can use to complete the registration process. IRS ECO is designed to accommodate businesses of all sizes without requiring special software.
Through IRS ECO, manufacturers can register and submit necessary information to the IRS for filing. The platform also includes validation checks and risk-mitigation measures, and it enables real-time monitoring of key metrics, such as customer service improvements and fraud detection.
For property placed in service starting in 2023, taxpayers may claim a credit of up to 30% of the cost for certain energy-efficient products or for a home energy audit.
The credit has specific limits, both per taxpayer and per tax year. Taxpayers can claim up to $3,200 in total, which includes a general limit of $1,200 and a separate $2,000 limit for specific items such as electric or natural gas heat pump water heaters, heat pumps, and biomass stoves or boilers that meet eligibility criteria.
The $1,200 general limit also includes the following specific caps for certain types of energy-efficient property:
– $600 for any qualified energy property.
– $600 total for exterior windows and skylights.
– $250 for each exterior door.
– $600 total for exterior doors.
– $150 for home energy audits.
Starting in 2025, the credit will only be available for items manufactured by a QM. Taxpayers will need to provide the PIN for the product when filing their tax returns in order to claim the credit.
