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February 9, 2025
Question

If the state covers some energy efficiency improvement costs, do you claim to total or remaining net cost on your federal credit?

  • February 9, 2025
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Massachusetts

    1 reply

    February 9, 2025

    If the state covers some energy efficiency improvement costs, you might be able claim the net cost on your federal credit. However, State energy efficiency incentives are generally not subtracted from qualified costs unless they qualify as a rebate or purchase-price adjustment (click and scroll to page 2) under federal income tax law. Many states label energy efficiency incentives as rebates even though they don't qualify under that definition

     

    For more details, see Notice 2013-70, IRB 2013–47 and the IRS guidelines on energy-efficient home improvement credits.