Extension, increase, and modifications of nonbusiness energy property credit

(a)

Extension of credit

Section 25C(g)(2) is amended by striking December 31, 2021 and inserting December 31, 2031.(b)

Increase in credit percentage for qualified energy efficiency improvements

Section 25C(a)(1) is amended by striking 10 percent and inserting 30 percent.(c)

Application of annual limitation in lieu of lifetime limitation

Section 25C(b) is amended to read as follows:

(b)

Limitations

(1)

In general

The credit allowed under this section with respect to any taxpayer for any taxable year shall not exceed $1,200.(2)

Windows

The credit allowed under this section by reason of subsection (a)(1) with respect to any taxpayer for any taxable year shall not exceed—(A)in the aggregate with respect to all exterior windows and skylights which are not described in subparagraph (B), $200,(B)in the aggregate with respect to all exterior windows and skylights which meet the standard for the most efficient certification under applicable Energy Star program requirements, the excess (if any) of $600 over the credit so allowed with respect to all windows and skylights taken into account under subparagraph (A).(3)

Doors

The credit allowed under this section by reason of subsection (a)(1) with respect to any taxpayer for any taxable year shall not exceed—(A)$250 in the case of any exterior door, and(B)$500 in the aggregate with respect to all exterior doors.

(d)

Modifications related to qualified energy efficiency improvements

(1)

Standards for energy efficient building envelope components

Section 25C(c)(2) is amended by striking meets— and all that follows through the period at the end and inserting the following:

meets—(A)in the case of an exterior window, a skylight, or an exterior door, applicable Energy Star program requirements, and(B)in the case of any other component, the prescriptive criteria for such component established by the IECC standard in effect as of the beginning of the calendar year which is 2 years prior to the calendar year in which such component is placed in service.

(2)

Roofs not treated as building envelope components

Section 25C(c)(3) is amended by adding and at the end of subparagraph (B), by striking , and at the end of subparagraph (C) and inserting a period, and by striking subparagraph (D).(3)

Air barrier insulation added to definition of building envelope component

Section 25C(c)(3)(A) is amended by striking material or system and inserting material or system, including air barrier insulation,. (e)

Modification of residential energy property expenditures

Section 25C(d) is amended to read as follows:

(d)

Residential energy property expenditures

For purposes of this section—(1)

In general

The term residential energy property expenditures means expenditures made by the taxpayer for qualified energy property which is—(A)installed on or in connection with a dwelling unit located in the United States and used as a residence by the taxpayer, and(B)originally placed in service by the taxpayer.

Such term includes expenditures for labor costs properly allocable to the onsite preparation, assembly, or original installation of the property.

(2)

Qualified energy property

The term qualified energy property means any of the following which meet or exceed the highest efficiency tier (not including any advanced tier) established by the Consortium for Energy Efficiency which is in effect as of the beginning of the calendar year in which the property is placed in service:(A)An electric heat pump water heater.(B)An electric heat pump.(C)A central air conditioner.(D)A natural gas, propane, or oil water heater.(E)A natural gas, propane, or oil furnace or hot water boiler.

(f)

Home energy audits

(1)

In general

Section 25C(a) is amended by striking and at the end of paragraph (1), by striking the period at the end of paragraph (2) and inserting , and, and by adding at the end the following new paragraph:

(3)30 percent of the amount paid or incurred by the taxpayer during the taxable year for home energy audits.

(2)

Limitation

Section 25C(b), as amended by subsection (c), is amended adding at the end the following new paragraph:

(5)

Home energy audits

(A)

Dollar limitation

The amount of the credit allowed under this section by reason of subsection (a)(3) shall not exceed $150.(B)

Substantiation requirement

No credit shall be allowed under this section by reason of subsection (a)(3) unless the taxpayer includes with the taxpayer’s return of tax such information or documentation as the Secretary may require.

(3)

Home energy audits

(A)

In general

Section 25C, as amended by subsection (a), is amended by redesignating subsections (e), (f), and (g), as subsections (f), (g), and (h), respectively, and by inserting after subsection (d) the following new subsection:

(e)

Home energy audits

For purposes of this section, the term home energy audit means an inspection and written report with respect to a dwelling unit located in the United States and owned or used by the taxpayer as the taxpayer’s principal residence (within the meaning of section 121) which—(1)identifies the most significant and cost-effective energy efficiency improvements with respect to such dwelling unit, including an estimate of the energy and cost savings with respect to each such improvement, and(2)is conducted and prepared by a home energy auditor that meets the certification or other requirements specified by the Secretary (after consultation with the Secretary of Energy, and not later than 180 days after the date of the enactment of this subsection) in regulations or other guidance.

(B)

Conforming amendment

Section 1016(a)(33) is amended by striking section 25C(f) and inserting section 25C(g).(4)

Lack of substantiation treated as mathematical or clerical error

Section 6213(g)(2) is amended—(A)in subparagraph (P), by striking and at the end,(B)in subparagraph (Q), by striking the period at the end and inserting , and, and(C)by adding at the end the following:

(R)an omission of correct information or documentation required under section 25C(b)(5)(B) (relating to home energy audits) to be included on a return.

(g)

Identification number requirement

(1)

In general

Section 25C, as amended by subsections (a) and (f), is amended by redesignating subsection (h) as subsection (i) and by inserting after subsection (g) the following new subsection:

(h)

Product identification number requirement

(1)

In general

No credit shall be allowed under subsection (a) with respect to any item of specified property placed in service after December 31, 2023, unless—(A)such item is produced by a qualified manufacturer, and(B)the taxpayer includes the qualified product identification number of such item on the return of tax for the taxable year.(2)

Qualified product identification number

For purposes of this section, the term qualified product identification number means, with respect to any item of specified property, the product identification number assigned to such item by the qualified manufacturer pursuant to the methodology referred to in paragraph (3).(3)

Qualified manufacturer

For purposes of this section, the term qualified manufacturer means any manufacturer of specified property which enters into an agreement with the Secretary which provides that such manufacturer will—(A)assign a product identification number to each item of specified property produced by such manufacturer utilizing a methodology that will ensure that such number (including any alphanumeric) is unique to each such item (by utilizing numbers or letters which are unique to such manufacturer or by such other method as the Secretary may provide), (B)label such item with such number in such manner as the Secretary may provide, and(C)make periodic written reports to the Secretary (at such times and in such manner as the Secretary may provide) of the product identification numbers so assigned and including such information as the Secretary may require with respect to the item of specified property to which such number was so assigned.(4)

Specified property

For purposes of this subsection, the term specified property means any qualified energy property and any property described in subparagraph (B) or (C) of subsection (c)(3).

(2)

Omission of correct product identification number treated as mathematical or clerical error

Section 6213(g)(2), as amended by the preceding provisions of this Act, is amended—(A)in subparagraph (Q), by striking and at the end,(B)in subparagraph (R), by striking the period at the end and inserting , and, and(C)by adding at the end the following:

(S)an omission of a correct product identification number required under section 25C(h) (relating to credit for nonbusiness energy property) to be included on a return.

(h)

Effective dates

(1)

In general

Except as otherwise provided by this subsection, the amendments made by this section shall apply to property placed in service after December 31, 2021.(2)

Home energy audits

The amendments made by subsection (f) shall apply to amounts paid or incurred after December 31, 2021.(3)

Identification number requirement

The amendments made subsection (g) shall apply to property placed in service after December 31, 2023.