About the 45L TAX CREDIT

Congress passed the original 45L tax credit incentive in 2005 creating an incentive for home builders and multi-family developers. Eligible contractors could claim a $2,000 tax credit for new construction or substantially remodeled energy-efficient homes in the year of completion.

Recently, as part of the Inflation Reduction Act, the 45L tax credit was extended through 2032, which made it easier to qualify and improved the credits. Changes include:

• In 2023, the credit increased from $2,000 to $2,500 for new Certified Energy Star homes.
• The base qualification for multi-family units decreased to $500, $1000 for ZER multi-family
• If certified under the Zero Energy Ready Homes Program (ZER), the credit is increased to $5,000
• Multifamily units that comply with prevailing wage requirements will be eligible for an enhanced credit of $2,500 for meeting the base qualification, and $5,000 for achieving Zero Energy Ready (ZER) certification.
  
  

45L tax credits have proven to be a valuable tool for promoting energy efficiency in the construction industry. These tax credits are specifically designed to encourage builders and developers to construct energy-efficient homes, which leads to reduced energy consumption and a lower environmental impact. By meeting the eligibility criteria, builders and developers can not only save money but also contribute to a more sustainable future. These credits provide financial incentives that help builders and developers offset the cost of incorporating energy-efficient features into their construction projects.