Use these popular tax credits before they expire

by J. Christian Manalli, Partner, SFBBG

J. Christian Manalli is a partner in the Chicago law firm of Schoenberg Finkel Beederman Bell Glazer LLC. Manalli concentrates his practice on federal tax, estate planning, probate and general business matters. Manalli can be reached at 312- 648-2300, or by email at christian.manalli@sfbbg.com.

The “Big, Beautiful Bill” is accelerating the expiration date of some energy and vehicle tax credits and deductions introduced by the Inflation Reduction Act back in 2022. Accordingly, you may wish to take advantage of these credits before they expire. Following is a select list of some of the popular credits:

Energy efficient home improvement credit. If you make qualified energy-efficient improvements to your home, you may qualify for a tax credit up to $3,200. The following are examples of expenses that may qualify if they meet requirements: exterior doors, windows, skylights and insulation materials, central air conditioners, water heaters, furnaces, boilers, heat pumps and biomass stoves and boilers. You can claim the credit for improvements made through December 31, 2025.

Residential clean energy credit. The residential clean energy credit equals 30 percent of the costs of new, qualified clean energy property for your home installed anytime from 2022 through 2032. However, this credit will not be allowed for any expenditures made after December 31, 2025. You may claim the residential clean energy credit for improvements to your main home, whether you own or rent it. Your main home is generally where you live most of the time. The credit applies to new or existing homes located in the U.S. Qualified expenses include the costs of: solar electric panels, solar water heaters, wind turbines, geothermal heat pumps, fuel cells and battery storage technology. Used (previously owned) clean energy property is not eligible.

Alternative fuel vehicle refueling property credit. If you install property to store or dispense clean-burning fuel or recharge electric vehicles in your home or business, you may be eligible for the alternative fuel vehicle refueling property tax credit. The property must be installed in a qualifying location and the credit allowed is based on the placed-in-service date for the refueling property. To qualify for the credit, the property must be used to store or dispense clean-burning fuel or to recharge electric motor vehicles. In addition, the property must: • Be placed in service during the tax year

• Have original use that began with the taxpayer.

• Be used primarily in the U.S. and U.S. territories.

• Be in an eligible census tract (as of January 1, 2023).

• If for business or investment use, be depreciable property.

• If for personal use, be installed on property used as a main home.

As of January 1, 2023, the definition of qualified property includes charging stations for 2- and 3-wheeled electric vehicles (for use on public roads) and includes bidirectional charging equipment. The credit will not be allowed for any property placed in service after June 30, 2026.

For individual taxpayers, the credit applies to property you buy and place in service at your main home now through June 30, 2026. The credit equals 30 percent of the cost of the property up to a maximum credit of $1,000 per item (each charging port, fuel dispenser or storage property). For businesses, the credit equals 6 percent of the cost of qualified property placed in service at a business or organization, up to a maximum credit of $100,000 per item (each charging port, fuel dispenser, or storage property). Businesses and organizations that meet prevailing wage and apprenticeship requirements are eligible for a 30 percent credit with the same $100,000 per-item limit.

Find details on the credit for businesses in Publication 6028 Businesses and the Alternative Fuel Vehicle Refueling Property Credit.