New Energy Efficient Homes Tax Credit

Part of the Federal Energy Policy Act of 2005, 45L granted builders tax credits for new, single- and multi-family energy-efficient homes.

45L Today & In The Future

The original credit expired on December 31, 2021. However, the recently passed Inflation Reduction Act (IRA) extends and enhances the 45L tax credit for builders. The enhanced 45L provision, known as the New Energy Efficient Homes Tax Credit, increases the energy savings requirements to newer standards, but offers a larger tax credit incentive.

Original 45L

  • Expired on December 31st, 2021, but is retroactive through December 31st, 2022
  • $2000 tax credit per home built in 2022
  • Must achieve >50% energy savings over the 2006 IECC
  • Minimum 10% of energy savings achievable by using spray foam insulation

Enhanced 45L

  • Enhanced 45L begins January 1st, 2023 through December 31st, 2032
  • $2500 per SF home, or $500 per MF unit, that meets Energy Start 3.1.11
  • $5000 per SF home, or $1000 per MF unit, that meets DOE ZERH 1.7

Zero Energy Ready Home Program

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Additional Requirements

  • 2012 IECC is the min requirement to qualify, but state and/or municipality adoption takes precedent
  • Builders must sign Energy Star Partnership Agreement to qualify for tax credits
  • All states will move to Energy Star 3.1.11 on 01/01/2023
  • CA, OR, WA, and FL already have state requirements

Benefits of HBS Spray Foam

As an air seal spray foam easily checks all the boxes required to achieve Energy Star 3.1.11.  Save time and operational frustration knowing that your homes will pass.

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FAQ

When does this program begin?

The 45L tax credit is currently funded. For 2022, homebuilders can receive a $2,000 tax credit for any home that is over 50% more efficient than the 2006 International Energy Conservation Code® (IECC®)

New requirements for the 45L tax credit become effective on January 1, 2023. The enhancements will provide a $2,500 tax credit for homes built to Energy Star 3.1.11 and a $5,000 tax credit for homes built to the DOE Zero Energy Ready Homes program (DOE ZERH 1.7)

When does this program expire?

The 45L tax credit is funded through December 31, 2032.

How do I file for the tax credit?

Via year-end tax filing.

What documents do I need to file?

Homebuilders can apply for the 45L tax credit by filling out IRS Form 8908, Energy Efficient Home Credit, while doing their federal tax return. For information about Form 8908 or to find the actual form, visit: https://www.irs.gov/forms-pubs/about-form-8908. Note: This information is subject to change as the IRS issues new guidance.

How do I know If my homes comply with the 45L provision?

By partnering with Energy Star, a rater will verify your home meets either Energy Star 3.1.11 or Department of Energy ZEHR

Who certifies I have earned this credit? / How do I get certification?

You will need to contact a local energy rater.  https://www.resnet.us/

How do I become an Energy Star New Construction Partner?

This website brings you directly to the application process:  https://www.energystar.gov/partner_resources/join_energy_star/new_home_construction

How does spray foam insulation help me qualify for this tax credit?

Spray foam is an industry-leading building solution that seals and insulates in one application. There are several ways using spray foam insulation can qualify. Here are just a couple:

  • Provides for air seal, insulation, and a Grade 1 install
  • Unvented Attic (UVA) application keeps ducts in conditioned space (Energy Star 3.2)

How much can I receive in tax credit?

Energy Star 3.1.11 = $2500 per single-family detached home and $500 per multifamily unit

DoE ZEHR 1.7 = $5000 per single-family detached home and $1000 per multifamily unit

How does spray foam assist in acquiring the ZERH credit?

  • “Checks the box” for air seal, insulation, and a Grade 1 install
  • Unvented attic (UVA) application assures that the HVAC and duct system stays within the thermal and air barrier boundary
  • Spray foam creates a tighter building envelope to assure that homes meet blower door requirements

 

Ready To Get Started?

Need a highly qualified contractor to consult with to determine the right spray foam insulation package to meet program requirements? The HBS experts are here to support you.

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Huntsman Building Solutions
10003 Woodloch Forest Drive
The Woodlands, Texas 77380

Telephone: 855.742.7227

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