Can You Get a Tax Credit for a New Roof?

A new roof is a significant home investment, often prompting homeowners to explore potential tax benefits. Understanding whether such an improvement qualifies for federal tax credits can help in financial planning. While many home upgrades can lead to tax savings, the specific eligibility criteria for a new roof require careful consideration of current tax laws and the type of roofing materials used.

Understanding the Energy Efficient Home Improvement Credit

The federal government offers incentives to homeowners who invest in making their homes more energy-efficient. One such incentive is the Energy Efficient Home Improvement Credit, detailed under 26 U.S. Code 25C. This credit aims to encourage homeowners to reduce their energy consumption and carbon footprint by upgrading various components of their residences.

This tax credit, updated significantly by the Inflation Reduction Act of 2022, generally covers 30% of the costs for certain qualified energy efficiency improvements and residential energy property expenditures. It is designed to offset the upfront expenses associated with these upgrades, making them more financially accessible. While the credit broadly applies to a range of home improvements, specific rules dictate which particular upgrades are eligible.

The credit has an annual limit, meaning homeowners can potentially claim it each year they undertake eligible improvements. This encourages ongoing investments in home energy efficiency over time, rather than a single, one-time claim. The types of improvements covered typically include upgrades to a home’s “building envelope,” such as insulation, windows, and doors, as well as certain energy-efficient heating and cooling systems.

Specific Roof and Property Eligibility

For a new roof to qualify for the Energy Efficient Home Improvement Credit (25C), its materials must meet precise energy efficiency standards. However, a significant change effective January 1, 2023, means that traditional energy-efficient roofs, such as metal roofs with pigmented coatings or asphalt shingles with cooling granules, no longer qualify for this specific credit.

Only roofs that actively generate clean energy, such as integrated solar shingles or solar roofing tiles, are eligible for a federal tax credit. These types of roofs fall under the Residential Clean Energy Credit (25D), a separate incentive for renewable energy property, not the Energy Efficient Home Improvement Credit (25C). If you install solar panels on an existing traditional roof, only the solar panels and their installation costs typically qualify for the clean energy credit, not the underlying roof itself.

Beyond material specifications, the property itself must meet certain criteria. The new roof or other qualifying improvement must be installed on an existing home that serves as your principal residence in the United States. This credit does not apply to newly constructed homes or properties used primarily as rental units. The improvement must also be a genuine upgrade, not merely a repair, and the qualified components should be expected to remain in use for at least five years.

Calculating Your Roof Credit

Given the updated eligibility rules, a standard new roof replacement generally does not qualify for the Energy Efficient Home Improvement Credit. However, for other eligible home improvements that do qualify, the credit allows you to claim 30% of the cost of the qualified expenses. There is an annual maximum credit of $1,200 for most energy-efficient property costs and home improvements. Certain specific items, like qualified heat pumps or biomass stoves, have a separate annual limit of $2,000, allowing for a potential total annual credit of up to $3,200 if combined with other eligible improvements.

When determining eligible costs, only the material costs of the qualifying improvements are typically includible for building envelope components like insulation or windows. Labor costs for the installation of these building envelope components do not qualify. However, for energy property such as heat pumps, installation labor costs can be included. Any subsidies, rebates, or other financial incentives received for the qualified expenses may need to be subtracted from the total cost before calculating the credit amount.

The credit is nonrefundable, meaning it can reduce your tax liability to zero, but you will not receive a refund for any excess credit amount. There is no lifetime dollar limit for this credit, allowing homeowners to claim the maximum annual credit each year they make eligible improvements.

Claiming the Credit and Maintaining Records

To claim the Energy Efficient Home Improvement Credit on your federal income tax return, you must complete and file IRS Form 5695, titled “Residential Energy Credits.” This form is submitted along with your main tax return, such as Form 1040.

When filling out Form 5695, it is important to accurately report all qualified expenses. For items placed in service starting in 2025, you may need to include a product identification number (PIN) from the manufacturer for certain qualifying items, though insulation materials are exempt from this requirement. Carefully review the instructions for Form 5695 for the specific tax year in which the improvements were made, as requirements can be updated.

Maintain thorough documentation for your home improvements. You should keep detailed records, including receipts for both materials and any associated labor costs, even if the labor itself does not qualify for the credit. Manufacturer’s certifications that confirm the energy efficiency of the products are also necessary. These records are crucial for substantiating your claim in case of an IRS inquiry or audit.