The Inflation Reduction Act Extends Residential Energy Efficiency Tax CreditsSeptember 7th, 2022 by Chris Collier
The nonprofit International Window Film Association (IWFA) announced that as part of the Inflation Reduction Act of 2022 (IRA) signed into law on August 16, 2022, residential energy efficiency tax credits have been extended through 2032 and may apply to window films.
“Window films are often the unsung hero when it comes to reducing carbon emissions as they reduce energy use and can be readily installed to upgrade existing windows as part of a building’s envelope,” says Darrell Smith, executive director of the IWFA. “Window films offer a cost-effective way to improve a home’s energy efficiency by reducing solar heat gain coming into the interior in summer, as well as helping to retain heat in winter.”
According to the Internal Revenue Service (IRS), existing Non-Business Energy Property Tax Credits can be applied retroactively through 2022 and then starting in 2023 through 2032, annual tax credits of up 30% of the cost of the improvement, to an annual maximum tax credit of $1,200, may be given.
Under the existing IRS provision and the International Energy Conservation Code (IECC), window film qualifies as an insulation material or system that is specifically and primarily designed to reduce heat loss or gain of a home. The existing provision for 2022 provides a 10% percent tax credit with a lifetime maximum of $500. The new law increases the amount of the credit and extends the credit to 2032. In addition, the new law repeals the requirement that expenditures must be made with respect to the taxpayer’s principal residence.
Under the provisions of the IRA, the tax credits have certain income limitations. Consumers are encouraged to check with their tax advisor to determine their eligibility and tax credits that may be used. In the IRS code, the measure is called a 25C tax credit, after the section of the tax code that started in 2006 and is labeled a “nonbusiness energy property credit;” now it is renamed as an “energy-efficient home-improvement credit.”
The Dealer Perspective
Patrick Latman, owner of Sun Solutions Tinting in Port Richey, Fla., says the extension is a ”massive” development.
“I would look up what parameters would qualify a client for such a program and have it ready in my team’s back pocket,” Latman says. “[It is] essentially giving qualifying participants up to $1,200 of residential film returned as a tax credit. Heading into a down economy coupled with the automotive sector of our industry on the decline, this could very well be the saving grace that window tint companies need.”
Mike’s Mobile Tint of Shelbyville, Ind., was founded in September 2000. Owner/installer Mike Leffler has used tax credits in the past to boost business. “I have used this before with customers and had one ask about this the other day,” Leffler says. “I will use this in my business and start telling customers about it.”
Mike Powell, owner of Day To Night Window Tinting in Roanoke Rapids, N.C., says the tax credit should positively impact business.
“This will and should significantly help us all as installers with the rising electrical cost to show more and more value and explain and educate on possible tax credits given back,” Powell says. “We are an upfront expense but clients’ investments are repaid through this tax credit and annual electrical savings due to our films making homes’ windows more efficient.”