With so many new programs coming out from the federal government, it can be difficult to understand what might benefit your capital improvement needs. Below is our shortlist of tax incentives and rebates that can be of significant benefit for Kansas City building owners. Look for events in the fall where we will break these down further for you with the help of our experts!
High-Efficiency Electric Home Rebates (HEERA) Program Link single + multifamily buildings
Point-of-sale rebates up to $14,000 for new, electric projects including heat pumps, heat pump water heaters, and electrical panel upgrades. Contractors can receive up to $500 per installation. Multi-family buildings qualify if greater than 50% of occupants are low-to-moderate income. Estimated to roll out in late 2023.
Home Energy Performance-Based, Whole-House Rebates (HOME) Program Link single + multifamily buildings
Rebates for energy efficiency retrofits range from $2,000-$4,000 for individual households and up to $400,000 for multi-family buildings. There are two paths for compliance: modeled energy savings pathway or measured energy savings pathway. Guidance for pathway compliance still to be determined with roll out estimated in late 2023.
25 C: Residential Energy Efficiency Tax Credit Program Link owner-occupied homes Extended through FY 2031, new credits start in 2023. Provides 30% tax credit for residential efficiency and electrification upgrades up to $3,200 per year. Covers purchase and equipment installation with annual credit limit resetting every year.
25 D: Residential Clean Energy Credit Program Link owner-occupied homes Extended through FY 2031, new credits start are RETROACTIVE to 2022. Provides 30% tax credit for geothermal heat pumps, solar panels, and battery storage. Covers purchase and installation and is UNCAPPED. Battery storage credits will be available in 2023.
45L Tax Credit: Residential Energy Efficiency Investments Program Link single + multifamily buildings
Provide taxpayers with a tax credit for eligible new or substantially reconstructed homes that meet applicable ENERGY STAR home program or DOE Zero Energy Ready Home (ZERH) program requirements. The new 45L provisions include two tiers of credits, with the higher credits for eligible homes and dwelling units certified to applicable ZERH program requirements.
179D Tax Deduction: Commercial Buildings Energy Efficiency Tax Deduction Program Link single + multifamily buildings
The 179D commercial buildings energy efficiency tax deduction primarily enables building owners to claim a tax deduction for installing qualifying systems in buildings. Tenants may be eligible if they make construction expenditures. NOTE: If the system or building is installed on federal, state, or local government property, the 179D tax deduction may be taken by the person primarily responsible for the system’s design.
Investment Tax Credit (ITC): Solar Program Link commercial and non-profit buildings (through direct payment)
The investment tax credit (ITC) is a tax credit that reduces the federal income tax liability for a percentage of the cost of a solar system that is installed during the tax year.
Production Tax Credit (ITC): Solar Program Link commercial and non-profit buildings (through direct payment)
The production tax credit (PTC) is a per kilowatt-hour (kWh) tax credit for electricity generated by solar and other qualifying technologies for the first 10 years of a system’s operation. It reduces the federal income tax liability and is adjusted annually for inflation.
Residential Solar Energy Credit Program Link homeowners, tenant-stockholder at cooperative housing corporation or condominium members
The federal residential solar energy credit is a tax credit that can be claimed on federal income taxes for a percentage of the cost of a solar PV system paid for by the taxpayer. (Other types of renewable energy are also eligible for similar credits but are beyond the scope of this guidance.) Can be rooftop or field installation.