We are thrilled to announce that Prestige Accounting Services Group (previously Prestige Wealth Accounting Group) has joined forces with Bacchetta & Company in an exciting new partnership!

Home Energy Audit Tax Benefits

Article Highlights:

  • Home Energy Improvements & Tax Credits

  • Home Energy Audit

  • Annual Credit Limit

  • Non-Refundable Credit

  • Improvement Category Limits

  • $1,200 Annual Credit limit Improvements

  • $2,000 Annual Credit limit Improvements

  • Energy Property Qualifications

Have you been thinking of making home improvements? If so, and they include energy saving improvements, you may qualify for some substantial income tax credits. Even if home improvements aren’t currently on your to-do list, with the increasing cost of energy you may find that energy saving home improvements, along with the tax credits that accompany them, are something you should be considering.

 Don’t know where to begin? Perhaps a good starting point would be with a home energy audit that identifies the most significant and cost-effective energy efficiency improvements you could make with respect to your principal residence, including a written estimate of the energy and cost savings with respect to each improvement, allowing you to pick the ones that best serve your needs and finances. In addition, the tax code now includes a tax credit of 30% of the cost of a home energy audit performed by a qualified home energy auditor up to a credit of $150 per year. The home energy auditor is required to provide you a written audit report. This credit is in addition to the annual credit limit for the actual energy saving home improvements you make. You can search the internet for a qualified auditor in your area.

For home energy audits in 2024 or a later year, you will need to substantiate that a qualified auditor conducted your home audit. To satisfy this requirement, the written audit should state that the auditor is certified by one of the certification programs listed on the Department of Energy certification programs for the Energy Efficient Home Improvement Credit page to conduct the home energy audit.

When making an energy saving home improvement that qualifies for a credit, keep in mind there are credit limits that you must consider to maximize your annual credit:

  1. The annual credit limit is $1,200. So, it may be appropriate to plan your home energy improvements over multiple years to maximize the tax credit.

  2. The improvement costs also have limits based on the category of the improvement. For example: Assume an energy efficient exterior window is one of your improvements and it costs $1,000. The credit allowable expense for an exterior window is only $600. Thus, the allowable credit for that window expense would be $180 (30% of $600).

  3. The credit is non-refundable, meaning it can only reduce your tax liability to zero and there is no carryover of unused credits to a subsequent year. However, don’t confuse that with the fact that you are reducing your overall tax. You can be receiving the benefit of the credit and still have a tax liability.    

The caps and categories of improvements under the annual $1,200 limitations are as follows:

  • $600 for any item of qualified energy property, that generally includes (this is not a complete list which only includes the more common improvements):

    o   An electric or natural gas heat pump water heater.
    o   An electric or natural gas heat pump.
    o   A central air conditioner.
    o   A natural gas, propane, or oil water heater, and
    o   A natural gas, propane, or oil furnace or hot water boiler.

  • $600 for exterior windows and skylights,

  • $250 for any single exterior door and $500 in the aggregate for all exterior doors.

Not subject to the annual $1,200 limit or the $600 per item limit and instead subject an aggregate annual limit of $2,000 are:

  • heat pumps,

  • heat pump water heaters,

  • biomass stoves, and

  • biomass boilers

The tax code sets out the requirements that must be met for the energy property to qualify for the credit. A few examples: exterior doors must meet Energy Star requirements, windows and skylights must meet Energy Star most efficient certification requirements, and electric or natural gas water heaters must meet or exceed the highest efficiency tier (not including any advanced tier) established by the Consortium for Energy Efficiency (list available at CEE Directory | AHRI (ahrinet.org)) that is in effect as of the beginning of the year in which the property is placed in service A home energy auditor or the seller/installer of the property should be able to provide you with the details. Be sure to ask for and retain written material that confirms the energy property qualifies for the credit. . .just in case the IRS wants proof of eligibility.

Please contact this office for more information about qualifying improvements and assistance in timing your energy efficiency improvements to maximize the tax benefits.

Share this article...

More About Us

Get to Know Prestige Accounting Services Group (previously Prestige Wealth Accounting Group)


Offices in Flemington, NJ and Califon, NJ

Our Mission: At Prestige Accounting Services Group (previously Prestige Wealth Accounting Group), we are on a mission to redefine the tax experience for individuals and small businesses. With a focus on personalized service, strategic planning, and expert guidance, we aim to empower our clients to succeed financially with confidence and ease.

Expertise in Action: With a wealth of experience and a team of dedicated professionals, we specialize in individual and small business tax preparation. While we excel in all areas of taxation, our passion lies in serving the unique needs of small business owners in New Jersey. We understand that small business taxation requires specialized knowledge and attention to detail, which is why we go above and beyond to ensure our clients receive the guidance and support they deserve.

Tailored Solutions for Every Client: Whether you're a high-net-worth individual seeking comprehensive tax planning or a small business owner in need of accounting and bookkeeping assistance, we have the expertise to meet your needs. Our team takes the time to understand your specific situation and develop customized solutions that align with your goals and objectives.

Why Choose Us?: What sets us apart from other New Jersey tax firms is our commitment to excellence and innovation in the field of taxation. We don't just prepare tax returns; we provide strategic insights, proactive planning, and actionable advice to help our clients achieve their financial goals. With a team of two CPAs, an EA, and an ERO, we have the expertise and resources to deliver exceptional service and results.

Your Success is Our Priority: At Prestige Accounting Services Group (previously Prestige Wealth Accounting Group), we measure our success by the success of our clients. We are dedicated to building long-lasting relationships, providing unparalleled service, and helping our clients thrive in today's ever-changing tax landscape.

We can't wait for you to experience the Prestige Accounting Services Group (previously Prestige Wealth Accounting Group) difference.

Tax & Small Business Updates

Get the latest in tax and small business updates and issues that affect your finances and growth prospects.

I confirm this is a service inquiry and not an advertising message or solicitation. By clicking “Submit”, I acknowledge and agree to the creation of an account and to the and .

Flemington Office

Looking for tax help in Flemington, NJ? You can find us at:

Millburn Office

Looking for tax help in Millburn, NJ? You can find us at:

Califon Office