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The 30% tax credit for energy-efficient windows is a government incentive to encourage homeowners and businesses to invest in more energy-efficient products. This tax credit is a part of the Energy Policy Act of 2005 and has been extended until December 31, 2021. In this article, we will be looking at how this tax credit works.

The Basics

The tax credit allows homeowners and businesses to claim a tax credit of up to 30% of the total cost of their energy-efficient windows. This credit is capped at $1,500 for windows installed in 2021. To qualify for this tax credit, windows must meet specific energy efficiency requirements.

The energy efficiency requirements for windows differ depending on where you live. The Environmental Protection Agency (EPA) establishes these requirements. The EPA establishes energy efficiency requirements for each region based on the climate of that area. Windows that meet these standards carry the ENERGY STAR label. It confirms that the window meets the energy efficiency standards set by the EPA.

Qualifying Windows

The windows you install in your home must meet the criteria set by the EPA to qualify for the tax credit. The criteria include requirements for the window's U-factor and solar heat gain coefficient (SHGC). U-factor measures how much heat can pass through a window, while SHGC measures how much solar radiation can enter through the window.

The energy-efficient windows that qualify for the tax credit must have a U-factor score of 0.30 or lower and an SHGC score of 0.30 or lower. There are different ratings for each climate zone based on where you live. For example, the U-factor and SHGC requirements are different for the Northern and Southern climate zones. It is essential to know the requirements for your climate zone to find the right qualifying windows.

Claiming the Tax Credit

Homeowners or businesses can claim the tax credit when filing their federal tax return. The credit can be carried forward to future years if the total amount exceeds the tax liability. The tax credit is claimed on Form 5695, which is filed along with the federal tax return.

It is essential to note that the tax credit only applies to the windows' purchase price and installation costs. The credit does not cover the cost of removing the old windows or any other associated costs. It is also essential to keep all receipts and documentation related to the purchase and installation of the windows as they will be needed when filing for the tax credit.

Conclusion

Investing in energy-efficient windows is beneficial in many respects. These windows make your home more comfortable and help you save money on energy bills. The 30% tax credit for energy-efficient windows is an added incentive that makes it easier to choose energy-efficient windows. By meeting the EPA energy efficiency requirements, homeowners and businesses can take advantage of this tax credit and receive a significant return on their investment while doing their part to protect the environment.