Tax Thresholds and Who Can Claim Credits

Forum|Forum|3 years ago
September 28, 2022
3 replies
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What are the income thresholds for each of the energy efficiency upgrades (solar, heat pump, solar water heater, battery backup)? Do you get any benefits if you are above the income thresholds? Can someone else in your household that is not an owner pay for and claim the credits? Do all car dealers allow the rebates to be taken upfront (if the buyer can't efficiently take the rebate)? When will each rebate start being available (solar, heat pump, solar water heater, battery backup)?

Esther M

Residential energy credits have no income limitation only the electric vehicle credits are tied to income levels. I believe the credit is only available to home owner. Before the Inflation Reduction Act, if you purchased residential energy efficient property like solar panels and solar water heaters for your home, the tax credit was 26% of your purchase. Under the new law the credit increased to 30% if you purchase the energy efficient equipment January 1, 2022 through December 31, 2032.

These are the changes related to Electric Vehicle Credits:

The manufacturer limitation is eliminated for cars sold after December 31, 2022
Requires final assembly in North America (Effective immediately on August 17, 2022, unless you have entered into a binding contract to purchase a new electric vehicle before August 16, 2022)
Manufacturer must be a qualified manufacturer
Manufacturer’s suggested retail price for vans, sport utility vehicles, and pick ups is limited to $80,000 and other cars are limited to $50,000
For new cars, modified adjusted gross income cannot exceed $300,000 married filing jointly, $225,000 head of household, $150,000 single
For used cars, modified adjusted gross income cannot exceed $150,000 married filing jointly, $112,500 head of household, $75,000 single

Most of the changes are effective with electric vehicles purchased starting January 1, 2023. The only change in the law that is effective immediately starting on August 17, 2022 is that new electric vehicles must receive final assembly in North America. People who entered a binding contract to purchase a new electric vehicle before the Inflation Reduction Act passed can follow the previous rules in place.

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anonymous17

i believe heat pump rebates are subject to income limits as per this section of the bill:
https://www.congress.gov/bill/117th-congress/house-bill/5376/text#H4D43FABFB4F9495C8A601D9A2C780ADC

i can quote the key points:
(c) High-Efficiency Electric Home Rebate Program.—
(ii) not more than $8,000 for a heat pump for space heating or cooling; and

(A) in the case of an eligible entity described in subsection (d)(1)(A)—

(i) 50 percent of the cost of the qualified electrification project for a household the annual income of which is not less than 80 percent and not greater than 150 percent of the area median income; and

TaxQuestions14Author

Aren't there limits based on a certain percentage of the local median income?

VincentL

You may be able to claim the Residential Energy credit if you made energy saving improvements to your US based home during the tax year. The credit is not based on any income limitation.

Review the following websites:

https://www.energystar.gov/

https://www.irs.gov/pub/irs-pdf/i5695.pdf

https://www.irs.gov/newsroom/energy-incentives-for-individuals-residential-property-updated-questions-and-answers

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