Updated FAQs were released to the public in Fact Sheet 2025-01 PDF, Jan. 17, 2025. This fact sheet contains all of the FAQs in one downloadable PDF.
Q1. What energy efficiency requirements must be met to qualify for the credit? (updated Jan. 17, 2025)
A1. To qualify for the credit, certain property must meet certain energy efficiency requirements:
- Exterior windows and skylights: must meet Energy Star most efficient certification requirements. For more information, see the Energy Star Windows & Skylights Tax Credit webpage.
- Exterior doors: must meet applicable Energy Star requirements. For more information, see the Energy Star Exterior Doors Tax Credit webpage.
- Insulation materials or systems (including air sealing materials or systems): must meet the prescriptive criteria established by the International Energy Conservation Code (IECC) standard in effect as of the beginning of the calendar year that is 2 years prior to the calendar year in which such materials or systems are placed in service. For example, materials or systems placed in service in 2025 must meet the criteria established by the IECC standard in effect as of Jan. 1, 2023, to qualify for the credit in 2025.
- Electric or natural gas heat pump water heaters, electric or natural gas heat pumps, central air conditioners, natural gas, propane, or oil water heaters, natural gas, propane, or oil furnaces or hot water boilers: must meet or exceed the highest efficiency tier (not including any advanced tier) established by the Consortium for Energy Efficiency (CEE) that is in effect as of the beginning of the calendar year in which the property is placed in service. See the CEE website for additional information on efficiency tiers and qualifying equipment. See the Department of Energy’s Tax Credit Product Lookup Tool for information on the rated performance of equipment.
- For split system heat pumps with both an indoor and outdoor component to be eligible for the credit, the entire system (indoor and outdoor components) must be installed and must meet the applicable CEE requirements. The Department of Energy’s Tax Credit Product Lookup Tool can provide information on the rated performance of certain combinations of indoor and outdoor components.
- Biomass stoves or boilers: must have a thermal efficiency rating of at least 75% (measured by the higher heating value of the fuel).
- Oil furnaces or hot water boilers: must meet or exceed 2021 Energy Star efficiency criteria and be rated by the manufacturer for use with fuel blends at least 20% of the volume of which consists of an eligible fuel (if placed in service after Dec. 31, 2022, and before Jan. 1, 2027), or must achieve an annual fuel efficiency rate of not less than 90 and be rated by the manufacturer for use with fuel blends at least 50% of the volume of which consists of an eligible fuel (if placed in service after Dec. 31, 2026). For more information, see the Energy Star webpages Furnaces (Natural Gas, Oil) Tax Credits and Hot Water Boilers (Natural Gas, Propane, Oil) Tax Credit.
- Improvements to, or replacement of, panelboards, sub-panelboards, branch circuits, or feeders: must be installed in a manner consistent with the National Electric Code, have a load capacity of not less than 200 amps, be installed in conjunction with any qualified energy efficiency improvements, or any other qualified energy property for which an Energy Efficient Home Improvement Credit is allowed, and enable its installation and use.
- Home Energy Audits: Must meet the requirements of Notice 2023-59.
Q2. Does an energy efficient building envelope component consisting of an insulation material or system have to meet the criteria established by the International Energy Conservation Code (IECC)? (added Jan. 17, 2025)
A2. Yes. An energy efficient building envelope component includes any insulation material or system, including air sealing material or system, that is specifically and primarily designed to reduce the heat loss or gain of a dwelling unit when installed in or on such dwelling unit, provided that it meets the prescriptive criteria for such component established by the most recent IECC standard in effect as of the beginning of the calendar year that is 2 years prior to the calendar year in which such component is placed in service. The 2021 IECC is the applicable standard for insulation materials placed in service in calendar years 2024 and 2025. Within the 2021 IECC, the following sections address different components that affect energy efficiency:
- Section R402.2 Specific insulation requirements.
- Section R402.4 Air leakage.
- Section R402.4.1.1 Installation.
- Table R402.4.1.1 Components of the building thermal envelope and air barrier criteria.
- It is not necessary to install all energy efficient building envelope components at the same time to meet the 2021 IECC prescriptive criteria. For instance, a taxpayer may choose to install the air sealing material in the attic in one year, and insulation material in the next year. To be eligible energy efficient building envelope components for purposes of the credit, however, the materials installed in each year must meet the applicable IECC prescriptive criteria for such materials. Meeting a whole building or dwelling unit air leakage rate is not required to meet the 2021 IECC prescriptive criteria for air sealing materials.
Q3. Where can taxpayers find information about the IECC? (added Jan. 17, 2025)
A3. Taxpayers can find more information about the insulation and air sealing requirements of the 2021 IECC, as well as further details about ways to identify opportunities for energy savings with insulation and air sealing at the Department of Energy webpage, Energy Efficient Home Improvement Credit Insulation and Air Sealing Essentials. Past and current IECC standards are available under the “I-Codes” tab of the Codes webpage of the International Code Council.
Related
- Energy efficient home improvement: Qualifying expenditures and credit amount
- Energy efficient home improvement: Energy efficiency requirements
- Energy efficient home improvement: Qualifying residence
- Energy efficient home improvement: Labor costs
- Energy efficient home improvement: Timing of credits
- Energy efficient home improvement: PIN requirements
- Energy efficient home improvement: General questions
- Energy efficient home improvement: Examples - How the credit limits work
Previous updates to FAQs
- Fact Sheet 2024-15 PDF, April 17, 2024
- Fact Sheet 2022-40 PDF, Dec. 22, 2022