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Energy Efficient Home Improvement Tax Credits & Rebates


When you are remodeling your home, installing new appliances, or making other improvements, it’s a good idea to select the most energy-efficient products available. Not only will they help you reduce your energy consumption and lower your utility bills, but they can also qualify you for valuable tax credits and rebates that keep your initial investment as low as possible.

This article will discuss some of the many incentives that are available to North Carolina homeowners from federal, state, and local governments, as well as local utility companies.

National Incentives and Tax Credits

The Residential Clean Energy Credit is a federal program that can help North Carolina residents make improvements to their main home, whether they own it or rent it. It’s not available for landlords or owners who do not live in the home. Until 2032, the credit covers up to 30% of the costs, including labor, for installing a selection of energy-efficient home upgrades, such as:

  • Solar panels to generate your own electricity
  • Wind turbines to generate electricity
  • A solar water heater certified by the Solar Rating Certification Corporation or similar organizations
  • A geothermal heat pump that is Energy Star-certified
  • A battery storage system that can store at least 3 kilowatt-hours of electricity
  • Qualified fuel cells that are at least 30% efficient

The fuel cell credit is limited to $500 per half kilowatt of capacity for a single person, or up to $1667 total per half kilowatt if there are multiple people in the home claiming the credit. There is no maximum credit amount for any of the other systems covered under the Residential Clean Energy Credit, nor any lifetime credit limit.

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Energy Star Appliance Tax Credits

As part of the Energy Efficient Home Improvement Tax Credit, homeowners can earn a credit of 30% of the cost of installing any of the following appliances, as long as they are Energy Star-certified:

  • Central air conditioners
  • Furnaces
  • Boilers
  • Heat pumps
  • Water heaters

The credit has an annual maximum of $1,200 with certain limitations, except for biomass boilers, biomass stoves, heat pumps, and heat pump water heaters, which qualify for a $2000 maximum annual credit that is counted separately from other tax credits. ENERGY STAR® certification is earned by appliances that use significantly less energy than competing products, as demonstrated by independent testing. It is a program run by the U.S. Department of Energy to help consumers save money while reducing the country’s dependence on finite energy resources.

Energy Efficient Home Improvement Tax Credits

In addition to the appliances listed in the previous section, the Energy Efficient Home Improvement Tax Credit also applies to other energy-efficient home improvements. North Carolina residents can earn up to a 30% credit for any of the following items:

  • Windows
  • Doors
  • Insulation and air-sealing products
  • Energy audits

The credit has an annual maximum of $1,200 with these limitations:

  • Up to $1,200 insulation and air sealing improvements
  • Up to $250 for one exterior door or $500 for all exterior doors
  • Up to $600 for windows
  • Up to $600 for central air conditioners
  • Up to $600 for natural gas, propane, or oil water heaters
  • Up to $600 for natural gas, propane, oil furnace, or hot water boilers
  • Up to $600 for improvements or replacements of electrical panels, branch circuits, or feeders
  • Up to $150 for home energy audits
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North Carolina State Rebates and Incentives

Several government agencies and utility providers in North Carolina also offer valuable tax credits and rebates for energy-efficient home upgrades. These can often be combined with federal programs to offer homeowners even more savings.

Duke Energy Residential Rebates

Duke Energy, one of the largest utility providers in North Carolina, offers excellent rebates and incentives to help consumers save energy while reducing the load on the electrical grid. These include:

  • HVAC rebates: New central air conditioner installations are eligible for rebates from $200 to $400, heat pumps are eligible for $300 to $500 rebates, and ductless mini-splits can earn a $500 rebate. Smart thermostats are eligible for a $50 rebate. Early replacements of older HVAC systems can earn up to a $500 rebate for central air conditioners, a $600 rebate for heat pumps, an $800 rebate for geothermal heat pumps, or an $800 rebate for switching from a multi-family electric resistance heating system to a heat pump. Only Duke Energy residential customers are eligible for these rebates, and all heating and cooling components must be replaced at the same time.
  • Insulation and air sealing rebates: Up to a $250 rebate can be earned for insulating an attic, and up to $100 can be earned for sealing ductwork. To qualify for the insulation rebate, homes must be at least one year old, the home must have at least 1,000 square feet of air-conditioned space, air leakage rates must be improved by at least 5%, and the current insulation of R-19 or below must be improved to at least R-30. To qualify for the duct sealing rebate, the home must be at least one year old, the home needs to have at least 1,000 square feet of air-conditioned space, and duct leakage must be reduced by 12%.
  • Heat pump water heaters: A new heat pump water heater with a uniform energy factor (UEF) of at least 3.3 can earn a rebate of $350.
  • Pool pumps: For homes with in-ground pools, a $300 rebate can be earned by replacing an older, single-speed pool pump with a qualifying variable-speed pool pump.

All of these upgrades must be performed by contractors approved by Duke Energy. The process begins by going to the Duke Energy website to find a qualified contractor for the project. Once the work is complete, the contractor will fill out the rebate form and provide any necessary documentation, which must be submitted within 60 days to be eligible for the rebate.

N.C. Weatherization Assistance Program

Designed to help low-income families reduce their energy costs while improving the health and safety of their homes, the North Carolina Weatherization Assistance Program is available for occupants of single-family homes, multi-family homes, and manufactured homes. Families must have an income that falls below 200% of the federal property level to be eligible, or they must be receiving cash assistance under the Work First or Supplemental Security Income. Households with elderly clients, people with disabilities, or families with children are the top priority.

Depending on the number of people in the home, the total income to qualify must be less than:

  • 1 person: $29,160
  • 2 people: $39,440
  • 3 people: $49,720
  • 4 people: $60,000
  • 5 people: $70,280
  • 6 people: $80,560
  • 7 people: $90,840
  • 8 people: $101,120

The services provided by the Weatherization Assistance Program include education on safety and energy-efficiency, as well as a full home inspection to address essential health, safety, and energy-efficiency concerns. Depending on the client’s needs, the program can:

  • Check for carbon monoxide leaks
  • Inspect combustion-based appliances like furnaces, water heaters, and stoves
  • Tune furnaces, boilers, heat pumps, or other heating equipment
  • Seal air leaks, seal ductwork, and add insulation in walls, floors, and attics
  • Install fire and carbon monoxide detectors
  • Make minor repairs related to major health and safety concerns
  • Install more efficient lighting, low-flow shower heads, water heater blankets, and pipe insulation
  • And more

To apply for the program, North Carolina residents should visit the N.C. Weatherization Assistance Program website to the nearest local service provider.

Save Money With CQC Home

Not only can these tax credits and rebates help you to save thousands on qualifying HVAC systems, appliances, and home upgrades, but they can also provide long-term savings through lower energy costs every month while helping the environment.

At CQC Home, we will work with you to provide energy-efficient home renovations and help you maximize your investment by choosing equipment that qualifies for these valuable tax credits and rebates. We offer award-winning design and build services throughout Raleigh, Durham, and Chapel Hill, including bathroom remodelingkitchen remodelinghome additionswhole-home remodeling, and more.

We are the Triangle’s premiere home remodeling company, and we provide trusted, top-quality craftsmanship with a full two-year warranty. With great customer reviews, easy-to-navigate price guides, and excellent communication, you can count on us to make the remodeling process as convenient as possible.

Call 919-971-5119 today to schedule your free consultation with our in-house designers at CQC Home in Raleigh, Durham, or the surrounding areas.