How Do You Claim the Blinds Tax Credit?

Federal programs encourage energy-efficient home upgrades by offering tax credits. These incentives can lower the total cost of enhancing a home’s energy performance and provide a dollar-for-dollar reduction of the taxes you owe.

Qualifying Products and Requirements

The tax incentive available for these upgrades is the Energy Efficient Home Improvement Credit. While there is no specific category for “window coverings,” some products like cellular shades with a honeycomb design may qualify if they are considered insulation. Their structure is designed to trap air and reduce heat transfer. These items would be claimed as insulation, not as part of a separate window category, and standard blinds or curtains do not meet the required energy-saving criteria.

To be eligible, the improvements must be made to an existing home that serves as your primary residence within the United States. The credit is not available for newly constructed homes or for properties that are rented out to others.

The products themselves must meet specific technical standards to qualify. Manufacturers certify which of their products meet the necessary criteria for the credit, and homeowners should look for a Manufacturer’s Certification Statement before purchase to ensure an item qualifies.

For property placed in service beginning in 2025, taxpayers will need to include a product identification number on their tax return to claim the credit. However, insulation and air-sealing materials or systems are an exception and do not have this requirement.

Calculating the Credit Amount

The Energy Efficient Home Improvement Credit allows you to claim 30% of the cost of qualifying building envelope components, including insulation. This calculation applies only to the purchase price of the products, including any sales tax paid. The costs associated with installation are not eligible for the credit and must be excluded.

The credit for all eligible building envelope improvements, including qualifying insulation, doors, and energy audits, is capped at a total of $1,200 per year. Unlike exterior windows, which have their own specific $600 annual sub-limit, qualifying insulation products fall under this broader $1,200 cap. The credit has no lifetime limit, allowing you to claim it in multiple years for new, qualifying improvements.

Required Documentation for the Credit

To substantiate your claim for the credit, you must retain specific documentation. The two primary records you need are the final purchase receipt or invoice and the Manufacturer’s Certification Statement. The receipt provides proof of the purchase date and the amount you paid for the qualifying products.

A Manufacturer’s Certification Statement is a signed document from the product’s maker that attests the item meets the specific energy efficiency requirements for the tax credit. You should secure this statement at the time of purchase, often by downloading it directly from the manufacturer’s website.

You are not required to submit these documents with your tax return. However, you must keep them with your personal tax records. In the event the IRS selects your return for review, you will need to present these documents to verify your eligibility.

How to Claim the Credit

To claim the credit, you must complete IRS Form 5695, Residential Energy Credits, to calculate and report the amount. This form must be attached to your annual federal tax return.

When filling out Form 5695, you will transfer the cost of your qualifying products from your purchase receipts onto the designated lines. The form guides you through the calculation, applying the 30% rate and the appropriate credit limits.

After completing the calculations on Form 5695, the resulting credit amount is then transferred to your main tax form, Form 1040. The credit is nonrefundable, which means it can reduce your tax to zero, but you will not receive any of it back as a refund beyond that point.