Two NAHB-supported bipartisan bills have been introduced in the House and Senate to update and extend two expired energy tax incentives frequently used by home builders and remodelers. These provisions are part of a broader group of temporary tax incentives, known as tax extenders, that expired at the end of 2017.
The Home Energy Savings Act (S. 2588 and H.R. 4506) would extend and improve the Section 25C tax credit for qualified energy efficiency improvements. This credit offers home owners an incentive to install certain energy efficient products, such as windows or HVAC systems.
The New Home Energy Efficiency Act (S. 2595 and H.R. 4646) would extend and modernize the Section 45L tax credit for energy efficient new homes. This credit incentivizes builders to exceed certain energy efficiency standards.
NAHB strongly supports both bills and will encourage Congress to move quickly to restore these two expired tax provisions.
Both Senate bills were introduced by Sens. Maggie Hassan (D-N.H.) and Susan Collins (R-Maine). The two House bills were introduced by Reps. Jimmy Gomez (D-Calif.) and Mike Kelly (R-Pa.). The use of the tax code to incentivize energy efficiency in buildings has a long history of bipartisan support, and NAHB is pleased to see that tradition continue with these bills.
The Home Energy Savings Act would reinstate and extend the Section 25C tax credit through 2026. It seeks to modernize the credit by establishing higher goals for qualifying energy efficient products while also increasing the value of the credit.
When last active, Section 25C provided a maximum credit covering 10% of the cost of the upgrade that was capped at $500. This bill would increase the credit percentage to 15% as well as increase the cap to $1,200. In addition, taxpayers are subject to a lifetime cap on claims for Section 25C, which this bill would also increase from $500 to $1,200.
It would also increase individual product caps, such as lifting the credit for a high-efficiency air conditioner from $300 to $600 and certain high-efficient windows from $200 to $600. Finally, the bill would permit labor costs to be included when calculating the credit.
The New Home Energy Efficiency Act would extend and update the Section 45L tax credit through 2022. The credit would remain at $2,000, and qualifying homes would have to continue to exceed heating and cooling standards by 50% above the 2006 IECC plus supplements.
Starting in 2021 and through the end of 2022, the credit value would increase to $2,500, but the energy efficiency targets would update to 60% above the 2006 IECC or 15% below the 2018 IECC. Builders would have the option to choose the pathway they prefer for 2021 and 2022.
NAHB continues to advocate for restoring these important tax provisions and appreciates the leadership of Sens. Hassan and Collins as well as Reps. Gomez and Kelly in introducing these bills.
For more information, contact J.P. Delmore
at 800-368-5242 x8412.