Unlock Thousands in Savings: Your Complete Guide to Energy Tax Credits for Roof Replacement in 2024
As energy costs continue to rise and homeowners seek ways to reduce their environmental footprint, understanding the available tax incentives for roof replacement has become more crucial than ever. While traditional roof replacement typically doesn’t qualify for energy tax credits, there are specific circumstances and materials that can help you save thousands of dollars on your federal and New York State tax returns.
Federal Energy Tax Credits: What Qualifies for Roof Replacement
A new roof may qualify for a 30% tax credit if it is made from materials that can produce electricity using solar energy, such as solar shingles or roofing tiles. However, it’s important to understand that traditional roofing materials and structural components do not qualify for the credit, and expenses made to upgrade or replace a roof in preparation for installing solar panels and related equipment aren’t qualified to claim the Residential Clean Energy Credit because they primarily serve as a roofing or structural function.
The key distinction lies in the functionality of your roofing materials. Some solar roofing tiles and solar roofing shingles serve as solar electric collectors while also performing the function of traditional roofing, serving both the functions of solar electric generation and structural support and such items may qualify for the credit. Some solar roofing tiles and solar roofing shingles serve the function of both traditional roofing and solar electric collectors, and thus serve functions of both solar electric generation and structural support. These solar roofing tiles and solar roofing shingles can qualify for the credit.
The Residential Clean Energy Credit
The Federal Solar Tax Credit or Residential Clean Energy Credit can be up to 30% of the total cost of qualified, newly installed property. The 30% credit is only valid on installations between 2022 and 2032. This substantial credit applies to qualifying solar electric property, including solar shingles and tiles that serve dual purposes as both roofing material and energy generation systems.
To qualify for this credit, you may claim the energy efficient home improvement credit for improvements to your main home. Your main home is generally where you live most of the time. In most cases, the home must be your primary residence (where you live the majority of the year).
Energy Efficient Home Improvement Credit
While traditional roof replacement doesn’t qualify, if you make qualified energy-efficient improvements to your home after Jan. 1, 2023, you may qualify for a tax credit up to $3,200. You can claim the credit for improvements made through December 31, 2025. Beginning Jan. 1, 2023, the credit equals 30% of certain qualified expenses, with specific limits on different types of improvements.
$1,200 for energy efficient property costs and certain energy efficient home improvements, with limits on exterior doors ($250 per door and $500 total), exterior windows and skylights ($600) and home energy audits ($150), and $2,000 per year for qualified heat pumps, water heaters, biomass stoves or biomass equipment.
New York State Energy Incentives
New York residents have access to additional state-level incentives that can be combined with federal credits. The New York State Solar Tax Credit, also known as the Solar Energy System Equipment Credit, is a powerful incentive for residential solar projects. This credit allows homeowners to claim 25% of their solar energy system costs, up to a maximum of $5,000, as a state income tax credit.
The IRA does not replace those New York State clean energy programs — it enhances them. New Yorkers can still take advantage of existing State programs to help them save more money, more energy, and get the most out of their IRA incentives.
Additional New York benefits include:
- NYS Solar Energy System Equipment Tax Credit, for purchased home solar systems with backup storage
- NYS Solar Sales Tax Exemption
- NYC Solar Electric Generating Systems (SEGS) Tax Abatement, creates a property tax exemption on the added home value from a solar & storage system
Important Deadlines and Requirements
Time is of the essence for homeowners considering energy-efficient roof replacements. These credits are set to expire at the end of 2025 due to the signing of the One Big Beautiful Bill. In 2025, for each item of qualifying property placed in service, no credit will be allowed unless the item was produced by a qualified manufacturer and the taxpayer reports the Qualified Manufacturer Identification Number (QMID) for the item on their tax return.
To claim these credits, file Form 5695, Residential Energy Credits Part II, with your tax return to claim the credit. You must claim the credit for the tax year when the property is installed, not merely purchased.
Working with Professional Contractors
When considering a roof replacement that could qualify for energy tax credits, it’s essential to work with experienced professionals who understand both the technical requirements and the complex qualification criteria. For Long Island homeowners, selecting a knowledgeable Roofing Contractor Long Island with expertise in energy-efficient installations is crucial for maximizing your tax benefits.
Expressway Roofing & Chimney, a family-owned company serving Nassau and Suffolk Counties for over 22 years, understands the unique challenges of Long Island’s coastal environment and can help homeowners navigate both traditional roofing needs and energy-efficient options. Their expertise in working with insurance companies and understanding local building requirements makes them an ideal partner for homeowners considering qualifying roof replacements.
Maximizing Your Savings
Qualifying credits will be applied to your federal tax return, meaning you will either receive a larger refund or owe a smaller amount, depending on your circumstances. However, the credit is nonrefundable, so you can’t get back more on the credit than you owe in taxes. You can’t apply any excess credit to future tax years.
For New York residents, you can claim the New York State Solar Tax Credit for the tax year in which your solar energy system was installed. If the full amount of the credit cannot be used in one year, it can be carried forward for up to five years.
Taking Action
With significant federal and state incentives available but limited time remaining, homeowners should act quickly to evaluate their options. All New York residents are eligible to receive a no-cost home energy assessment that can reveal how efficiently your home is operating and where energy is being wasted. An assessment will provide you with recommendations to save energy and improve the efficiency, comfort, and safety of your home.
Before making any decisions, consult with tax professionals and experienced contractors who can help you understand which improvements qualify for credits and how to maximize your savings while improving your home’s energy efficiency and protection.