The Department of the Treasury and the Internal Revenue Service (IRS) have released Revenue Procedure 2024-31 and proposed regulations outlining guidance for the Energy Efficient Home Improvement Credit. These updates are designed to clarify the process for manufacturers and taxpayers, ensuring a streamlined system for claiming this valuable credit.
Here’s a breakdown of the key details you need to know.
What’s New for Manufacturers?
To be eligible as a Qualified Manufacturer (QM) under the program, companies producing specified energy-efficient products must adhere to new procedures:
- Register and Agree with the IRS: Manufacturers must register and enter into an agreement with the IRS to qualify.
- Assign Unique Product Identification Numbers (PINs): Each qualifying product must be assigned a unique PIN.
- Label Products with PINs: All eligible products must display their assigned PIN.
- Periodic Reporting: Manufacturers are required to report these PINs regularly to the IRS.
To make this process easier, the IRS is rolling out the Energy Credits Online Portal (IRS ECO).
About the IRS ECO Portal
The IRS ECO platform is a free, secure electronic service that simplifies registration and reporting for manufacturers of energy-efficient products. Key features include:
- Accessibility for businesses of all sizes—no special software is required.
- Built-in validation checks to reduce errors and detect fraudulent activity.
- Real-time monitoring of key metrics, enhancing customer service and oversight.
By using the IRS ECO platform, manufacturers can ensure compliance with the IRS requirements while benefiting from an efficient digital process.
What’s New for Taxpayers?
For property placed in service beginning in 2023, taxpayers can claim a credit equal to 30% of the total amount paid for qualifying energy-efficient home improvements or home energy audits.
Credit Limits
The total credit is capped at $3,200 per taxpayer annually:
- General Limit: $1,200, which includes:
- $600 for qualified energy property.
- $600 for exterior windows and skylights (total).
- $250 per exterior door, up to $600 for multiple doors.
- $150 for home energy audits.
- Special Limit for Heat Pumps and Biomass Stoves: $2,000 for electric or natural gas heat pumps, heat pump water heaters, and biomass stoves or boilers.
Important Changes Starting in 2025
Beginning in 2025, a new requirement comes into effect:
- Taxpayers will only be eligible for the credit if the energy-efficient property was produced by a Qualified Manufacturer (QM).
- The product’s PIN must be included on the taxpayer’s return to claim the credit.
What This Means for Homeowners and Manufacturers
These updates emphasize accountability and traceability, ensuring that energy-efficient products meet strict IRS standards. For homeowners, the credit offers substantial financial incentives to invest in energy-saving upgrades. For manufacturers, compliance with the IRS’s QM process opens opportunities to align with a growing market for sustainable home improvements.
Take Action Today
- Homeowners: Consider investing in energy-efficient upgrades to take advantage of the 30% credit. Be sure to check if your products qualify under the program.
- Manufacturers: Register through the IRS ECO portal (coming soon) to become a Qualified Manufacturer and help your customers claim their credits with ease.
For full details, view Revenue Procedure 2024-31 on IRS.gov. Stay ahead of these changes and maximize the benefits of energy efficiency!
