Updating credit for nonbusiness energy property

(a)

In general

Section 25C of the Internal Revenue Code of 1986 is amended—(1)in subsection (a)(1), by striking 10 percent and inserting 15 percent,(2)in subsection (b)—(A)in paragraph (1)—(i)by striking $500 and inserting $1,200, and(ii)by striking December 31, 2005 and inserting December 31, 2021, and(B)by striking paragraphs (2) and (3) and inserting the following:

(2)

Limitation on window attachment products

In the case of amounts paid or incurred for products described in subsection (c)(2)(B) by any taxpayer for any taxable year, the credit allowed under this section with respect to such amounts for such year shall not exceed the excess (if any) of $600 over the aggregate credits allowed under this section with respect to such amounts for all prior taxable years ending after December 31, 2021.(3)

Limitation on insulation material or system

In the case of amounts paid or incurred for components described in subparagraph (A) or (D) of subsection (c)(3) by any taxpayer for any taxable year, the credit allowed under this section with respect to such amounts for such year shall not exceed the excess (if any) of $600 over the aggregate credits allowed under this section with respect to such amounts for all prior taxable years ending after December 31, 2021.(4)

Limitation on windows

(A)

In general

(i)

Energy Star Most efficient

In the case of amounts paid or incurred by any taxpayer for any taxable year for components described in subsection (c)(3)(B) which meet the most efficient certification under applicable Energy Star program requirements, the credit allowed under this section with respect to such amounts for such year shall not exceed the excess (if any) of $600 over the aggregate credits allowed under this section with respect to such amounts for all prior taxable years ending after December 31, 2021.(ii)

Energy Star

In the case of amounts paid or incurred by any taxpayer for any taxable year for components described in subsection (c)(3)(B) which do not meet the most efficient certification under applicable Energy Star program requirements, the credit allowed under this section with respect to such amounts for such year shall not exceed the excess (if any) of $200 over the aggregate credits allowed under this section with respect to such amounts for all prior taxable years ending after December 31, 2021.(B)

Election

(i)

In general

For purposes of any amounts paid or incurred by any taxpayer for components described in subsection (c)(3)(B), the credit allowed under this section shall only be allowed for components described in clause (i) of subparagraph (A) or clause (ii) of such subparagraph, but not both, as elected by the taxpayer during the first taxable year in which such credit is being claimed by the taxpayer.(ii)

Irrevocability

The Secretary shall, through such rules, regulations, and procedures as are determined appropriate, establish procedures for making an election under this subparagraph, which shall require that—(I)any election made by the taxpayer shall be irrevocable, and(II)such election shall remain in effect for all subsequent taxable years.(5)

Limitation on doors

In the case of amounts paid or incurred for components described in subsection (c)(3)(C) by any taxpayer for any taxable year, the credit allowed under this section with respect to such amounts for such year shall not exceed—(A)the excess (if any) of $500 over the aggregate credits allowed under this section with respect to such amounts for all prior taxable years ending after December 31, 2021, or(B)$250 for each exterior door.(6)

Limitation on residential energy property expenditures

The amount of the credit allowed under this section by reason of subsection (a)(2) shall not exceed—(A)in the case of any energy-efficient building property—(i)for any item of property described in clause (ii) of subparagraph (A) of subsection (d)(3), $800,(ii)for any item of property described in clause (i) or (iii) of such subparagraph, $600, and(iii)for any item of property described in clause (iv) of such subparagraph, $400, and(B)in the case of any qualified natural gas, propane, or oil furnace or hot water boiler (as defined in subsection (d)(4)), an amount equal to—(i)$600 for a hot water boiler, and(ii)in the case of a furnace, an amount equal to the sum of—(I)$300, plus(II)if the taxpayer is converting from a non-condensing furnace to a condensing furnace, $300.

(3)in subsection (c)—(A)in paragraph (2), by striking subparagraphs (A) through (C) and inserting the following:

(A)in the case of an exterior window, a skylight, or an exterior door, applicable Energy Star program requirements,(B)in the case of any window attachment product, the applicable certification requirements for such product under the Attachments Energy Rating Council Certification Program, and(C)in the case of any other component, the prescriptive criteria for such component established by the International Energy Conservation Code, as such Code (including supplements) is in effect on January 1 of the calendar year in which such component is installed.

(B)in paragraph (3), by striking subparagraph (D) and inserting the following:

(D)any air barrier material, system, or assembly which is specifically and primarily designed to minimize the passage of air through the building thermal envelope and its assemblies when installed in or on a dwelling unit.

, and

(C)by adding at the end the following new paragraph:

(5)

Labor costs

The term qualified energy efficiency improvements includes expenditures for labor costs properly allocable to the onsite preparation, assembly, or original installation of any energy efficient building envelope component.

(4)in subsection (d)—(A)in paragraph (2)—(i)in subparagraph (A)—(I)in clause (i), by adding or at the end,(II)in clause (ii), by striking , or and inserting a period, and(III)by striking clause (iii), and(ii)by striking subparagraphs (B) and (C) and inserting the following:

(B)

Efficiency standards

Property described in subparagraph (A) shall meet or exceed the requirements of the highest efficiency tier (not including any advanced tier) established by the Consortium for Energy Efficiency which are in effect on January 1 of the calendar year in which the property was acquired.

(B)by striking paragraph (3) and inserting the following:

(3)

Energy-efficient building property

The term energy-efficient building property means property which—(A)is—(i)an electric heat pump water heater, (ii)an electric heat pump, (iii)a central air conditioner, or(iv)a natural gas, propane, or oil water heater, and(B)meets or exceeds the requirements of the highest efficiency tier (not including any advanced tier) established by the Consortium for Energy Efficiency which are in effect on January 1 of the calendar year in which the property was acquired.

(C)in paragraph (4), by striking achieves an annual fuel utilization efficiency rate of not less than 95 and inserting meets or exceeds the requirements of the highest efficiency tier (not including any advanced tier) established by the Consortium for Energy Efficiency which are in effect on January 1 of the calendar year in which the property was acquired, and(D)by striking paragraph (5),(5)in subsection (e), by adding the following new paragraphs at the end:

(4)

Installation standards

The terms energy efficient building envelope component and qualified energy property shall not include any components or property which are not installed according to any applicable Air Conditioning Contractors of America Quality Installation standards which are in effect at the time that such components or property are placed in service.(5)

Replacement of terminated standards

In the case of any standard, requirement, or criteria applicable to any energy efficient building envelope component or qualified energy property which is terminated after the date of enactment of the Home Energy Savings Act, the Secretary, in consultation with the Secretary of Energy, shall identify a similar standard, requirement, or criteria for purposes of determining the eligibility of any such component or property for purposes of credit allowed under this section.

, and

(6)in subsection (g)(2), by striking December 31, 2021 and inserting December 31, 2028.(b)

Effective date

The amendments made by this section shall apply to property placed in service after December 31, 2021.