The 45L Tax Credit Process

Priority Energy’s HERS Raters are very familiar with the 45L Tax Credit program and Nicor's Energy Efficiency packages. They can help with the energy efficiency requirements and verifications needed so you qualify for every incentive.

Priority Energy can help you attain credit by:

Designing a new home that will qualify (with Energy Modeling)
Inspecting and certifying an energy efficient dwelling (HERS Rating)
Preparing the Tax Credit statement

The 45L Federal Tax Credit Program for 2023 and Beyond

The Inflation Reduction Act (IRA) extends the Section 45L Tax Credit for energy efficient new construction until 2032, but it also brings a qualification change for home builders and HVAC contractors beginning on January 1, 2023.

We've compiled the key details in case you haven't read the policies yet.

Increased Incentives and Qualification Changes Beginning January 1, 2023

Biden's IRA now specifies that new homes and multifamily units must be ENERGY STAR certified to qualify for the 45L tax credit (for homes acquired on or after January 1, 2023). The rebate program is open to new construction single-family, manufactured, and multifamily homes through January 2032.

Single family homes that qualify for the more advanced energy efficiency certification of Zero Energy Ready Home (ZEHR) will be eligible for double the base line amount.

Single-Family New Homes - $2,500 available for ENERGY STAR v3.1 certified homes.
Single-Family New Homes - $5,000 available for Zero Energy Ready Homes (ZEHR).
Manufactured Homes - $2,500 available for ENERGY STAR certified manufactured homes (currently Version 2, with Version 2.1 proposed to be implemented in May 2023).
Multifamily Homes - $500 available for ENERGY STAR certified multifamily units meeting the ENERGY STAR Multifamily New Construction National program requirements.

The 45L Federal Tax Credit Program (through December 31, 2022)

Home builders can earn up to $2000 in tax credit (valid through Dec. 31, 2022) for each energy efficient single family, multi-family or manufatured home they construct and sell.

In December 2019 Congress extended the Section 45L Tax Credit for energy efficient new homes to encourage the industry to build more high-performance homes. They have also made the program retroactive which means homes, (defined below), built between 2018 through December of 2020 are eligible for the tax savings.

What are the energy efficiency requirements for homes to qualify for 45L tax credit in 2022?

The efficiency requirements remain unchanged from the original tax credit program. With today’s more stringent IECC 2018 code in effect, most current construction will qualify. Homes must be 50% more efficient on heating, cooling and hot water use than the IECC 2006 standards. This does not include lighting and appliances. Proof of this is measured with a HERS Rating. (These requirements are vaild through December 31, 2022)

Who is eligible for the 45L tax credit?

An eligible contractor is the person who constructed the qualified energy efficient home (or produced a qualified energy efficient home that is a manufactured home). A person must own and have a basis in the qualified energy efficient home during its construction to qualify as an eligible contractor with respect to the home. For example, if the person that hires a third party contractor to construct the home owns and has the basis in the home during construction, the person that hires the third party contractor is the eligible contractor and the third party contractor is not an eligible contractor. This includes:

Single family home builders/developers
Multi-family home builders/developers
Manufactured home builders

What types of property are eligible for the 45L Tax Credit?

• Single Family Homes
• Affordable Housing (LIHTC)
• Apartment buildings
• Assisted living housing
• Production home developments
• Residential condominiums
• Student housing
• Substantial reconstruction or rehabilitation

What is the process to get the tax credit?

Each dwelling must have an energy use analysis to verify it meets the efficiency requirements. Priority Energy's certified RESNET Raters will create an Energy Model and HERS Rating for your property. Get you project verified and take advantage of the tax credit available to you. Contact us at 1.312.767.9047.

More info on the tax credit can be found at: https://www.law.cornell.edu/uscode/text/26/45L

Energy Efficiency