Exterior Doors That Qualify for a Tax Credit Explained
Learn how to identify energy-efficient exterior doors that qualify for a tax credit, the certification and documentation needed, and how to claim the benefit.
Upgrading to energy-efficient exterior doors can improve insulation and curb appeal while also qualifying for a tax credit. This incentive encourages homeowners to invest in products that reduce energy consumption, potentially lowering both utility bills and tax liability.
Understanding how to take advantage of this opportunity requires knowing which doors meet the necessary criteria and how to properly claim the credit.
Requirements for Qualification
Not all exterior doors qualify. Eligible doors must meet specific energy efficiency standards, including material composition, certification by recognized authorities, and adherence to required performance ratings.
Materials
The materials used in a door impact its insulation properties and tax credit eligibility. Qualifying doors are typically made from fiberglass, steel, or insulated wood. Models with a polyurethane or polystyrene foam core provide better insulation than hollow or minimally insulated doors.
Energy-efficient glass—such as low-emissivity (low-E) coatings or multiple panes filled with insulating gases like argon or krypton—enhances thermal performance. Doors with large glass sections may need to meet stricter insulation standards. Checking the manufacturer’s U-factor and Solar Heat Gain Coefficient (SHGC) values helps determine eligibility.
Certification
An exterior door must be certified for energy efficiency to qualify for a tax credit. The ENERGY STAR® program, managed by the U.S. Environmental Protection Agency (EPA) and the Department of Energy (DOE), is the primary certification to look for. ENERGY STAR®-labeled doors meet or exceed federal insulation and heat retention standards.
Manufacturers provide a Manufacturer’s Certification Statement confirming a product’s eligibility. While not required for tax filing, homeowners should keep this document in case of an audit. Because ENERGY STAR® criteria are periodically updated, verifying the latest standards ensures compliance.
Energy Ratings
Two key metrics determine a door’s energy efficiency: the U-factor and the Solar Heat Gain Coefficient (SHGC). The U-factor measures how well a door prevents heat from escaping—lower values indicate better insulation. The SHGC measures how much solar radiation a door allows through—lower numbers reduce heat gain from sunlight.
ENERGY STAR® qualification depends on regional climate zones. Colder areas require doors with lower U-factors to retain heat, while warmer regions prioritize SHGC ratings to minimize heat absorption. Doors with significant glass portions may need additional insulation features, such as thermal breaks or insulated frames, to meet efficiency standards. The National Fenestration Rating Council (NFRC) label provides details on a door’s energy performance.
Steps to Claim the Credit
After installing a qualifying exterior door, homeowners must follow the correct process to claim the tax credit. Energy-efficient home improvements fall under the Nonbusiness Energy Property Credit, part of the Residential Energy Credits. For the 2024 tax year, this credit is claimed using IRS Form 5695. The calculated credit amount is then transferred to Schedule 3 of Form 1040, reducing tax liability.
The credit covers 30% of the cost of qualifying doors, up to a maximum of $500 per year, with a cap of $250 per door. Unlike a deduction, which lowers taxable income, this credit directly reduces the tax bill. However, it is nonrefundable, meaning it can reduce taxes owed to zero but does not generate a refund if the credit exceeds total tax liability.
When completing Form 5695, homeowners must report the total cost of qualifying doors, excluding installation expenses, as labor costs do not count toward the credit. The form requires specifying the type of energy-efficient improvement made.
Documentation for Recordkeeping
Proper documentation is essential when claiming this tax credit. Homeowners should keep purchase receipts showing the date, cost, and description of the door. If a receipt lacks details on energy-efficient features, additional documents from the manufacturer or retailer may be needed.
A copy of the Manufacturer’s Certification Statement should also be retained, as it confirms the door meets efficiency standards. While not required for tax filing, this document is useful in case of an IRS audit. Keeping product labels, technical specifications, or promotional materials can further support a claim.
Taxpayers should store digital copies of all relevant documents with their tax returns for at least three years, aligning with the IRS’s standard audit period. If the credit affects a home’s adjusted cost basis—potentially impacting future capital gains taxes—keeping records longer may be beneficial.
Potential Tax Impact
Claiming the tax credit for energy-efficient exterior doors directly reduces tax liability, but the overall financial impact depends on individual tax circumstances. Since the credit is nonrefundable, it only offsets taxes owed—it does not result in a refund if the credit exceeds total tax liability.
For homeowners planning to sell, energy-efficient upgrades may also affect capital gains taxes. Certain improvements can be added to a home’s cost basis, potentially reducing taxable gains when the property is sold. The IRS allows up to $250,000 in tax-free capital gains for single filers ($500,000 for married couples), but those exceeding this threshold could benefit from documenting eligible improvements. IRS Publication 523 provides guidance on which upgrades may be included in basis adjustments.