Form 5695: Energy Efficient Home Improvement Credit (Part II)

Taxpayers who made energy saving improvements to their home in 2024 may qualify for the Energy Efficient Home Improvement Credit. In prior years, it was known as the Nonbusiness Energy Property Tax Credit. To qualify, the home must be in the U.S. and where you live most of the time. A “home” is defined as a house, houseboat, mobile home, cooperative apartment, condominium, or a manufactured home that that meets the Federal Manufactured Home Construction and Safety Standards. You can use Form 5695, Part II to claim the Energy Efficient Home Improvement Credit.

What is the Energy Efficient Home Improvement Credit?

The Energy Efficient Home Improvement Credit is for taxpayers who make qualified energy saving improvements to their home between January 1, 2023, and January 1, 2033. The maximum you can claim each year is:

  1. $1,200 for energy property costs and qualified energy efficiency improvements with limits of:
    • $600 for windows
    • $500 for doors ($250 per door)
    • $150 for home energy audits
  2. $2,000 per year for qualified heat pumps, biomass stoves or biomass boilers The credit has no lifetime dollar limit.
Starting in 2025, no credit will be allowed for qualifying property unless it was made by a qualified manufacturer, and you include the item's PIN on your tax return.

What are qualified energy efficiency improvements that can be included on Form 5695?

Qualified energy efficiency improvements include:

  • Any insulation designed to reduce heat loss or gain
  • Exterior windows and skylights
  • Exterior doors
  • Any metal roof with pigmented coatings or asphalt roof with cooling granules that are designed to reduce heat gain
When calculating your credit, don’t include the cost of onsite preparation, assembly, or original installation to your home.

What are residential energy property costs that factor in to Form 5695?

Residential energy property costs include:

  • Electric heat pump water heaters
  • Electric heat pumps
  • Central air conditioners
  • Natural gas, propane, or oil water heaters
  • Natural gas, propane, or oil furnaces
  • Natural gas, propane, or oil hot water boilers.
  • Advanced circulating fans for natural gas, propane, or oil furnaces
You can include any labor costs associated with the onsite preparation, assembly, or original installation of the energy property.

How do I claim the Energy Efficient Home Improvement Credit?

To claim the Energy Efficient Home Improvement Credit, you need to file Form 5695, Part II with your tax return. ezTaxReturn is the fastest and easiest way to do your taxes. Most people can e-file in 30 minutes or less.

What if my qualified property was jointly owned?

If you and your neighbor split the cost of the qualifying property, both of you can claim the energy efficient home improvement credit. You just have to calculate the credit based on the portion you paid. The credit limit applies to each of you separately.

What if I’m married, and own more than one home?

If you and your spouse owned and lived in separate homes, the credit limit applies to each person individually. Keep in mind, if you’re filing separate returns, each person will need to complete their own Form 5695.

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