45L tax credit returns for energy-efficient new home construction

Under the provisions of the 45L tax credit, eligible contractors may request up to $2,500 to $5,000 credit for new energy-efficient systems.

When Congress approved the climate change bill known as the Inflation Reduction Act in August, it brought back the 45L tax credit for energy-efficient buildings. The tax credit criteria is set by the U.S. Department of Energy.

The 45L tax credit, which provided builders a tax credit for energy-efficient new homes, expired in 2021. The $2,000 tax credit provision has been retroactively extended for all of 2022 and will continue through 2032. Beginning in 2023, the tax credit will be $2,500 per home if the home meets the eligibility standards of the EPA’s ENERGY STAR certification for single-family new homes and will increase to $5,000 per unit for homes that are certified to meet the Department of Energy’s Zero Energy Ready Home program.

“There appears to be an issue remaining to be resolved for Minnesota related to non-gaskets attic hatches and the Energy Star requirements,” said Nick Erickson, senior director of housing policy for Housing First Minnesota. “Housing First Minnesota is reaching out to the Department of Energy to see if an exception to the requirements can be made.”

Builders with questions about the 45L tax credit should contact their energy rater or tax professional.