There are many great reasons for making your Greenwood home more energy-efficient and environmentally friendly, but it’s hard to top the one the federal government offers: a tax credit worth as much as $3,200!
Adopted by Congress in 2005 (and officially known as the Nonbusiness Energy Property Credit), what’s commonly called the 25C tax credit is a federal incentive aimed at encouraging homeowners throughout Johnson County and across the nation to invest in energy-efficient improvements so they can reduce their carbon footprint.
Unlike many federal tax incentives, the 25C tax credit is exactly what its name suggests: a tax credit. Generally speaking, tax credits are even better than tax deductions. That’s because tax deductions simply reduce the amount of your taxable income, while credits apply directly to taxes you owe. The 25C tax credit offers Greenwood homeowners as much as $3,200 off the taxes they actually owe. (However, your tax credit can’t be bigger than the amount you owe in taxes.)
Greenwood homeowners can take advantage of the 25C tax credit by investing in specific energy-efficient improvements such as:
Unfortunately, the 25C tax credit is only available for improvements to existing homes, not to homes that are under construction.
As noted earlier, this is a tax credit, not a deduction or a refund. The 25C tax credit currently rewards Greenwood homeowners with up to 30 percent back on the cost of specific energy-efficiency improvements and activities. There is an annual limit of $2,000 for heat pumps and heat pump water heaters and $1,200 for other upgrades. In other words, if you spend $4,000 on a qualifying improvement, you’ll get a $1,200 tax credit, while a $2,000 improvement will result in a $600 credit.
Greenwood homeowners need to follow a process to obtain this generous tax credit:
The 25C tax credit is available to Greenwood homeowners every year. That means they could receive the credit for one improvement to their homes this year and receive it again for a different improvement next year.
The 25C tax credit gives Greenwood homeowners a valuable incentive for making their residences more energy efficient. By investing in improvements, homeowners not only contribute to a greener planet but also receive financial benefits. If you’re considering improvements to your home, the Johnson Heating Cooling & Plumbing team will be happy to discuss the tax credits that may be available to you. (But we’re not tax professionals, so be sure to check with yours.)
Recent changes in legislation drastically shored the availability of the 25C Tax Credit. The correct plan is scheduled to end 12-31-25. We don't know if they will every be available again - so if it's time to a upgrade your heating and air conditioning system give Johnson Heating, Cooling, and Plumbing a call at (317) 714-0936 we'll schedule a no cost home survey and provide you quotes and all the information you need to make an informed decision.