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Harnessing Savings: Exploring Energy Tax Credits for New Roofs and Solar Equipment

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Taxes. If you own a home, you know how burdensome it is to pay taxes, whether you owe federal or state income taxes, property taxes, or otherwise. The problem is that you can’t avoid them. They are a part of living and an essential element in home ownership. Thankfully, homeowners have been provided with ways to alleviate the pain of taxes through incentives that reduce their tax obligation or provide a dollar-for-dollar refund.

The Relationship Between Tax Credits and a New Roof

brick house in Kansas City with a new energy efficient roof installed by Bill West Roofing

Greater Kansas City Area homeowners can upgrade their older roofs with newer, energy-efficient systems and receive roofing tax incentives. But, to enjoy this benefit, you must install Energy Star products.

The Energy Star products eligible for a tax credit include asphalt and metal roofing. To qualify for this opportunity, you must use an asphalt roof with cooling granules or a pigment-coated metal roof.

These Energy Star-certified product designs reflect a substantial percentage (if not all) of the sun’s rays, lowering roof surface temperature and mitigating or eliminating heat transfer into your home.

Available Roofing Tax Credit Incentives

Although a federal roofing tax credit is not available presently, homeowners have several opportunities to make improvements to their roofing systems, including the following options:

The federal residential solar energy credit (ITC) can be claimed by U.S.-based residential homeowners for installing a solar photovoltaic system (i.e., solar panels or solar cells) on their principal residence or a second home owned by the homeowner, but not a rental property.  

This photovoltaic system efficiently captures the sun’s light energy and converts it into electricity for residential use. Of note, this system must meet applicable electrical and fire code requirements. It also needs to be Energy Star-certified. This designation means the product uses less energy than a comparable product not Energy-Star certified. It also must fulfill strict energy efficiency criteria set forth by the US Department of Energy or the US Environmental Protection Agency (EPA).

The Inflation Reduction Act (IRA) of 2022 enables homeowners to make their homes more energy-efficient by transitioning to cleaner energy sources. For solar energy (photovoltaic) systems purchased and installed after December 21, 2021, but before January 1, 2033, a homeowner will receive a federal tax credit of 30% of the amount of the photovoltaic system. For example, if a homeowner buys and installs a system for $20,000 in 2024, they will receive a federal tax credit of $6,000 (30% of $20,000) for 2024.

For qualifying insulation products acquired and installed after December 31, 2022, but before January 1, 2033, a homeowner can claim 30% of the project cost (up to a maximum credit of $1,200) as a federal tax credit. Note: The overall total limit for an efficiency tax credit in a given year is $3,200 ($1,200 for any combination of home envelope improvements, including windows, doors, skylights, insulation, furnaces, boilers, or central air conditioners, and $2,000 for any mix of heat pumps, heat pump water heaters, and biomass stoves or boilers).

Under the provisions of this federal tax incentive program, the following insulation products can qualify: rolls, batts, rigid boards, blow-in fibers, expanding spray, and pour-in-place. They also need to be Energy Star-certified insulation products that have been third-party verified. Insulation-related products that air seal and thereby reduce air leaks also may qualify (as long as they have a Manufacturer’s Certification Statement): house wrap, caulk designed to air seal, spray foam in a can (designed to air seal), and weather stripping.

This federal tax credit is available for skylights purchased and installed after December 21, 2022, but before January 1, 2033. A homeowner can claim 30% of the project cost up to a maximum credit of $600 for a given tax year. Remember that a skylight is a home envelope improvement (subject to a total annual limit of $1,200). The skylight needs to be an Energy Star-eligible product.

A home energy audit involves a homeowner obtaining an inspection and written report from a certified home energy auditor, for their principal residence. The audit “identifies the most significant and cost-effective energy efficiency improvements” and “an estimate of the energy and cost savings with respect to each such improvement.” A homeowner can claim 30% of the cost of this audit up to a maximum credit amount of $150.

Solar Tax Credits sign with sunset in the background

Ready to Upgrade to an Energy-Efficient Roof?

roofer with gloved hands installing new insulation to make new roof more energy sufficient

If you would like to upgrade to an energy-efficient roof, and receive federal tax incentives, reduced utility bills, and other homeownership benefits, we can help. At Bill West Roofing, we are the Greater Kansas City Area’s roofing experts, including repairs and replacements.

At Bill West Roofing, our professionally trained and certified technicians have served a wide range of clientele for nearly 50 years. We have the knowledge and experience required to provide exemplary roofing services. Contact us today to secure a free estimate.

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