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Federal Tax Credit for Window Shades | 2024 Guide

Tax credits are beneficial to help save money while tax filing. Federal Energy Efficient Home Improvement Credit under the Inflation Reduction Act of 2022 is encouraging consumers to prioritize energy efficiency for home improvements. This guide will help you understand federal tax credit for window shades.
Federal Tax Credit for window shades
Federal Tax Credit for Window Shades | 2024 Guide
Energy-saving measures have become increasingly popular among homeowners, while encouraging long-term savings. Did you know that the government is offering a federal tax credit for upgrading to energy-efficient window treatments. Let's understand the details related to federal tax credit for window shades.

Eco-friendly and energy-saving measures have gained popularity among homeowners in the United States. These actions not only enhance the lifestyle but also result in long-term savings. The government gives people a federal tax credit for switching to energy-efficient window shades to encourage them to make eco-wise choices. It intends to regulate house temperature, lower electricity bills and promote green living.

A homeowner can claim up to 30% of the purchase price as a tax credit with a maximum annual amount of $1,200. This blog outlines what you need to know about federal tax credit for window shades to decide whether it suits your home.

Federal Tax Credit for Window Shades

Under the Inflation Reduction Act, the Energy Efficient Home Improvement Credit provides homeowners a tax credit equal to a fraction of their qualified energy-efficient home improvement expenditures. This provision includes specified window shades that comply with certain standards set by the Department of Energy (DOE). 

Installing these types of blinds at home may potentially enable homeowners to cut down on their utility bills and offset their installation costs by claiming this allowance against income taxes. The federal tax credit for window shades allows homeowners to enhance their living spaces, reduce energy bills, and contribute to sustainable living. 

Understanding Energy-Efficient Window Shades

Some window shades are not eligible for tax credit. The key lies in their ability to insulate windows to reduce heat gain in summer or heat lost during winter. Here are some types of window shades that usually qualify:

  • Honeycomb shades: These include multiple fabric layers, which are airtight and serve as insulation barriers.
  • Pleated shades: Made using specific energy-efficient fabrics, pleated shades can provide exceptional insulation benefits.
  • Roman shades: Like pleated shades, Roman ones made from qualifying fabrics can enhance a window’s insulating properties.

It is important to note that the exact criteria used for qualifying window shades may change. To be sure your chosen shade qualifies for the credit, look for the ENERGY STAR® label and check the manufacturer’s specifications. The label has been independently tested and meets DOE’s energy efficiency standards.

Federal Tax Credit Explained

The federal tax credit for energy-efficient window shades is a beneficial incentive the US government provides to promote sustainable living. It allows homeowners to claim a non-refundable tax credit for 30% of the cost of qualified energy-efficient products, including qualifying window shades. 

The credit is capped at a maximum of $1,200 per year, applicable to the combined cost of all qualifying home improvements installed during the tax year. Additionally, the credit applies to the total cost of the shades, excluding installation charges.

For instance, if you purchase and install qualifying window shades for $800, you can claim a tax credit of $240 (30% of $800). However, if the total cost, including installation, reaches $1,500, the credit will still be capped at $1,200 (30% of the maximum allowable amount of $1,200).

Eligibility Criteria for Window Shades

There are a few key points to consider regarding window shade eligibility for the tax credit:

  • Product type: As mentioned earlier, only specific window shade types with qualifying insulation properties are eligible.
  • ENERGY STAR® label: Look for the ENERGY STAR® label on the product to ensure it meets the DOE’s standards.
  • Primary residence: The credit applies to only window shades installed in your residence.
  • Date of purchase and installation: To be eligible for the credit, the window shades must be purchased and installed between January 1, 2023, and December 31, 2032.
  • Tax liability: This is a non-refundable tax credit. It can reduce your tax liability but will only generate a refund if you owe federal income tax.

How to Claim Federal Tax Credit for Window Shades

To claim the credit for qualifying window shades, you’ll need to gather the following documents:

  • Receipts for the purchase and installation of the window shades. Ensure the receipts clearly detail the product description, cost, and date of purchase.
  • Obtain a certificate from the window shade manufacturer. This document should confirm that the shades meet the Department of Energy’s (DOE) energy-efficiency criteria.
  • You can then file Form 5695, Residential Energy Credits with your tax return to claim the credit. 

However, it’s advisable to consult with a tax professional to ensure you meet all the eligibility requirements and complete the filing process correctly.

Costs vs. Benefits

The federal tax credit for qualifying window shades offers a significant financial incentive, but weighing the costs and benefits before deciding is crucial. Here’s a breakdown of both sides:

Costs

  • Purchasing qualifying window shades can involve a significant upfront cost, depending on the size, type, and number of shades needed for your windows.
  • While some window shades are easy to install yourself, others may require professional assistance, which can increase the overall investment.

Benefits

  • The credit allows you to recoup 30% of the cost of qualifying window shades, capped at $1,200 per year for all energy-efficient home improvements combined.
  • By improving window insulation, qualifying window shades can potentially lead to significant energy savings throughout the year, lowering your utility bills.
  • These shades can regulate indoor temperature by minimizing heat gain in summer and heat loss in winter, contributing to a more comfortable living environment.
  • Lower energy consumption translates to a reduced environmental footprint.

Read related blog: Maximizing Tax Benefits: Earned Income Credit Explained

Conclusion

The federal tax credit for window shades presents a compelling opportunity for homeowners seeking to improve energy efficiency and comfort in their homes. By strategically investing in qualifying window shades, you can reap benefits beyond the initial tax credit. Beem’s free tax calculator helps you navigate the complexities of tax filing and smooth tax-related calculations. 

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Author

Picture of Prem Kishan

Prem Kishan

A seasoned Product Manager who thrives on making a meaningful impact within the organization, Prem is deeply passionate about tackling intricate problems using cutting-edge technology and is a specialist in tax content.

Editor

This page is purely informational. Beem does not provide financial, legal or accounting advice. This article has been prepared for informational purposes only. It is not intended to provide financial, legal or accounting advice and should not be relied on for the same. Please consult your own financial, legal and accounting advisors before engaging in any transactions.

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