January 11th, 2023
The Inflation Reduction Act and Tax Credits
Over the past 30 years, I have seen a lot of ups and downs. Just when I thought I had seen it all, COVID-19 came. The past three years have been some of the most interesting I’ve ever experienced in the door and window business, but, as usual, they have brought the creativity of our industry up as we evolved and changed with the condition of the marketplace. There were some bumps along the way, but the past three years have been historic for our industry. As we get into 2023, it’s always great to reassess the prior year and see how far all of us have come.
This leads me to the Inflation Reduction Act. Out of this legislation, our industry has gotten some tax credits on doors and windows that extend through 2032. On an extremely important note, the tax credit on windows is very different today than it was last year. Last year, windows merely needed to qualify for Energy Star in your specific region to qualify for the tax credit. This year through 2032 (when the tax credits expire), windows need to be in Energy Star’s Most Efficient category.
With the Energy Star Most Efficient 2023 designation, a double hung window, for example, needs to have a 0.20 U-factor rating or better (lower) to qualify for the tax credits. I remember when I first looked at this. I had to do a double take to ensure I was reading this correctly.
Also, there are a lot of tax incentives for energy efficient items, so be careful. Don’t try to be a CPA for your customers. Point out the tax credits, obviously, and show them the pluses and minuses for getting to the Most Efficient category, but let the homeowner decide if it makes sense.
I see lots of advertising out there saying things like, “We will double your tax credit.” This is great awareness if you know that windows must be in the Energy Star Most Efficient 2023 program. My advice is: Ensure you are accurate in your advertising. Also, remember, at the end of 2023 and beginning of 2024, you will need to provide homeowners with a manufacturers’ certificate showing that windows meet the criteria for the tax credit. Protect your brand and yourself by providing accurate information to your consumer.
Finally, I think there is a lot to be optimistic about in 2023! Our industry tends to be recession resistant. As interest rates go up, folks tend to stay in their homes and fix them up. As a result, business should remain strong in 2023. Also, I have mentioned this in the past, but review your goals for this year and make sure you have a plan to achieve them. Be different, be creative and do consultative selling. Stay positive!