45L Renovation Credits
The 45L renovation credit is a tax credit that was introduced as part of the Tax Cuts and Jobs Act of 2017. It allows homeowners who make certain energy-efficient improvements to their homes to claim a credit on their federal income tax return. The credit is equal to a percentage of the cost of the improvements, up to a maximum credit of $2,000. To be eligible for the credit, the improvements must be made to a principal residence that is located in the United States and owned by the taxpayer. The credit is available for improvements made in 2018, 2019, and 2020.
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Frequently asked questions
Who is eligible for the 45L tax credit?

The 45L tax credit can only be claimed by the qualified contractor, typically the developer, builder, or homeowner. They must own the property during its construction or improvement.

Which builders can apply?

Any builder registered with ENERGY STAR is eligible.

Which IRS-approved modeling software can be used?

The IRS approves the following third-party modeling software: Ekotrope, REM/RATE, EnergyGuage, EnergyPro, and Micropas.

What are the requirements for DOE zero-energy ready?

DOE zero-energy ready standards include Indoor airPlus and ENERGY STAR certification as a baseline, but they demand stricter criteria for most components.

Can builders claim both the 45L and the Low-Income Housing Tax Credit (LIHTC)?

In the case of affordable housing, new credits won't reduce the LIHTC basis. Developers can benefit from both the 45L and LIHTC.

Does ENERGY STAR certification increase home appraisal value?

Energy-efficient certified homes generally sell faster and at higher prices than homes without such certifications.

Which types of construction qualify for the 45L credit?

Newly constructed homes or substantially renovated single-family detached, duplexes, townhouses, apartments, and condominiums are all eligible. This includes projects like assisted living and student housing. Market rate, affordable housing, and condominiums are also included.

What about multifamily projects with four or more stories?

Multifamily projects with four or more stories can now qualify for the 45L credit. Previously limited to buildings with three stories or less, this update allows all multifamily projects to access the credit at $2,500/$5,000 per unit, with prevailing wage requirements.

What are prevailing wage requirements?

Prevailing wages are determined by local economies. You can find the applicable rates for your area on this website: Davis Bacon Wage Rate Determination–Office of Construction & Facilities Management (

Can manufactured homes qualify?

Manufactured homes meeting ENERGY STAR Labeled Home requirements can qualify for a $1,000 credit.

How have the existing 45L tax credits been expanded?

The tax credit has increased from the current $2,000 (as of 2021) for meeting outdated IECC references to $2,500 for meeting ENERGY STAR criteria and $5,000 for meeting DOE Zero-Energy ready standards.

What are eligible improvements included in 45L?

  • Insulation
  • Energy-efficient windows and doors
  • Energy-efficient roofs
  • Energy-efficient heating and cooling systems
  • Energy-efficient water heaters
Can I claim the credit if I rented out my home?

No, the credit is only available for improvements made to a taxpayer's principal residence.

Can I claim the credit if I used the home as a vacation home or rental property?

No, the credit is only available for improvements made to a taxpayer's principal residence.

Is there a limit on the amount of credit that I can claim?

Yes, the credit range is from $2,000 - $5, 000per tax year.

Can I claim the credit if I made the improvements before 2018?

No, the credit is only available for improvements made in 2018, 2019, and 2020.

Can I claim the credit if I received a grant or rebate for the improvements?

Yes, you can still claim the credit as long as you have not received a grant or rebate for the full cost of the improvement.

Can I claim the credit if I received a tax credit or deduction for the improvement in a previous tax year?

No, the credit is not available for improvements for which you have already received a tax credit or deduction. Is a one-time federal tax credit.

Can I claim the credit if I am a homeowner with low income?

Yes, there is no income limit for claiming the 45L renovation credit.