Vanessa Glavinskas 2 minute read

5 eco-friendly purchases that could help you lower your tax bill (or get a bigger refund!)

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It’s that time of year again. April 15 is the deadline to file your federal income taxes.

Here are five environmentally friendly purchases you may be able to claim for a tax credit.

An electric vehicle (including plug-in hybrids)

An electric car plugged in to a charger
EVs, new and used, qualify for tax credits. (Getty)

Eligible taxpayers can get a credit of $7,500 for purchasing a new electric vehicle. (The credit is $4,000 for used EVs.) Both full EVs and plug-in hybrids are eligible, thanks to the Inflation Reduction Act, and the credits are available to taxpayers with incomes under $150,000 if single, or $300,000 if married and filing taxes jointly. 

Some states offer their own credits in addition to the federal incentive. (You can search for state-level tax credits here.)

A heat pump

Heat pumps, popular in Europe, but just gaining traction in the U.S., offer a more eco-friendly way to heat and cool your home than the traditional air conditioner/furnace combination. If you bought and installed one in 2023, you may be able to claim 30% of the project cost, up to $2,000. 

If this is something you’re thinking about — make sure that the type of heat pump you install qualifies for the credit. (It must meet a certain level of energy efficiency.) This guide can help. 

An efficient water heater

There’s also a tax credit for installing an eco-friendly water heater. There are some that run on solar power, and even heat pump water heaters, which pull heat from the surrounding air. Homeowners and renters are eligible for this credit, but the water heater must meet or exceed pretty high efficiency standards. The Consortium for Energy Efficiency keeps a list of qualifying water heaters here

New windows or doors

Two people installing new doors
Save on taxes with energy-efficient windows and doors. (Getty)

Did you install more efficient windows or doors in 2023? Add insulation? Seal a pesky air leak? You could get up to 30% of what you spent back. 

For example, if you added insulation (and kept your receipts) you could get up to a $1,200 federal tax credit for making your home more energy efficient. If you bought energy-efficient windows, you could get up to $600 back. The credit for energy-saving doors is $250. 

Solar panels

The credit for purchasing and installing solar panels is one of the more generous tax incentives available. It covers 30% of qualifying costs — including labor. Given that the average cost of installing a residential rooftop solar-powered system is about $19,000, that could mean a federal tax credit of more than $6,000.


The fine print

This list is not comprehensive, nor is it intended to be tax advice. If you already filed your taxes, but realized you can claim an additional credit — the IRS has instructions on how to amend your return here

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