Tax Credit for Energy-Efficient Windows: What Homeowners Should Know

In addition to enhancing curb appeal, energy-efficient windows can cut energy bills and tax liability. Replacing old windows with ENERGY STAR-certified windows can reduce household energy bills by up to 13% when swapping out single-pane windows, according to the U.S. Environmental Protection Agency. Pair those ongoing energy savings with federal tax credits, and you’ve got a home upgrade that will shortly pay for itself.

The U.S. incentivizes clean energy upgrades through a tax credit worth up to $600 annually for qualifying window installations. The federal tax credit resets annually, allowing $600 claims each tax year you perform qualifying improvements. Unlike tax deductions that merely reduce taxable income, credits slash what you owe the IRS dollar for dollar. The program extends through 2032, providing ample planning time for window replacement projects. However, given congressional habits, extensions seem likely.

I’ve heard stories about homeowners forfeiting hundreds of dollars because they didn’t know about the requirements or lost documentation afterward. Understanding eligibility before purchasing makes the difference. Proper paperwork and knowing claim procedures for your tax return are equally important. 

Whether you’re replacing select windows now with plans for future installations or addressing the entire existing home simultaneously, you can find substantial savings if you navigate the requirements correctly.

What Is the Federal Tax Credit for Energy-Efficient Windows?

Homeowners can claim up to $600 per year for qualifying window upgrades as part of the federal government’s Energy Efficient Home Improvement Credit, renewed through 2032.

Now, here’s where it differs from other tax breaks: It’s a nonrefundable credit, not a rebate or deduction. The credit reduces your tax bill dollar for dollar, but if the credit is larger than what you owe, you can’t get money back. For example, if you owe $400 in taxes and qualify for a $600 window credit, your tax bill drops to zero. But the IRS won’t send you a $200 check for the difference.

The program covers 30% of your window material costs, up to that $600 annual limit. However, labor costs don’t count — only what you pay for the actual window materials. I learned this the hard way and had to go back to my contractor asking for a breakdown of material versus labor costs because you need those numbers for your tax return.

The credit also resets every January. So if you replace windows in multiple rooms over a few years, you can potentially claim $600 each year you make qualifying improvements. There’s no lifetime cap either, which means you’re not penalized for spreading the work across multiple tax years.

What Makes a Window Energy-Efficient for Tax Purposes?

Not every energy-efficient window qualifies for federal tax credits — windows must meet a specific performance standard. ENERGY STAR certification serves as the baseline requirement, yet tax credits demand an even higher standard called the “ENERGY STAR Most Efficient” criteria. The distinction matters significantly for eligibility. Only the most advanced windows on the market qualify, limiting your available options considerably.

Two key measurements determine window qualification: U-Factor and Solar Heat Gain Coefficient (SHGC). U-Factor measures insulation effectiveness — lower numbers indicate better heat retention inside homes. SHGC measures solar heat transmission through windows, particularly important in warmer climates where heat blocking takes priority.

Federal tax credit qualification requires windows meeting ENERGY STAR Most Efficient standards for your climate zone. The most recent requirements break down like this:

How Much Can You Save?

Window tax credit math is straightforward once you understand the rules. You can claim 30% of the cost of your window materials, not including labor, up to a maximum of $600 per year. So, if you want to spend $2,000 on qualifying windows, you’d get the full $600 credit. Spend $1,500 on windows? Your credit would be $450.

Breaking Down the Real Savings

Calculating the potential savings for my own home surprised me with how the numbers worked out. Let’s say you’re replacing 10 windows at $300 each in materials costs (with separate labor costs). That’s $3,000 in qualifying expenses, but you’d still only receive the $600 maximum credit, as the annual cap applies regardless of how much you spend on window replacement costs.

Timing becomes everything in scenarios like that. If I had replaced five windows this year for $1,500 in materials, I’d get a $450 credit. Then, if I replaced five more windows next year for another $1,500, I’d get another $450 credit the following tax season. Spreading the work across two years yields a total of $900, compared to the $600 I’d receive by completing everything at once.

Because the credit resets every January, you can claim up to $600 each year you install qualifying windows through 2032. There’s no lifetime limit on the program either, so you could theoretically claim $600 annually for seven more years if you keep making eligible improvements. Though at some point, you’d run out of windows to replace.

But here’s a catch many homeowners don’t consider: If you owe the government less than $600 when you do your taxes, you won’t get the full benefit. It’s a nonrefundable credit, so if you only owe $300 in taxes, that $600 credit only saves you $300. High earners with substantial tax bills benefit most from the program. If you’re retired or have a low income year, the credit might not help as much as you’d hope.

How To Claim the Tax Credit

Getting your window tax credit isn’t complicated, but staying organized from the moment you start shopping makes all the difference. My brother-in-law learned his lesson when he had to track down paperwork months after his installation was complete. The IRS wants specific documentation, and your contractor might not automatically provide everything you need.

Keep Your Documentation

Save every piece of paperwork related to your window purchase and installation. You’ll need the manufacturer’s certification statement, which proves your windows meet ENERGY STAR Most Efficient Standards. This document is sometimes included with your windows and sometimes can be downloaded from the manufacturer’s website. Your receipt must clearly separate materials from labor costs, so ask your contractor to itemize these on your invoice. Some contractors may push back on breaking down costs, but you should insist on it.

Ensure you obtain the ENERGY STAR label or certification number for each window. I keep photos of the labels on my phone as backup documentation, since these small stickers can get damaged during the installation.

File IRS Form 5695

Tax season means you’ll use IRS Form 5695 to claim your credit. Enter window costs in Part II under “Energy Efficient Home Improvement Credit.” You’ll enter the total cost of qualifying materials, and the form calculates your credit amount automatically, applying the 30% rate and $600 annual cap.

Avoid the last-minute scramble by gathering all the information you’ll need early. I recommend filling out the form as soon as you receive your tax documents, as searching for receipts and certification numbers in April can create unnecessary stress.

Consult a Tax Pro If Needed

Multiple home energy audits or energy-efficient upgrades across different energy systems may warrant consulting a tax professional. A tax pro can help you understand how you can pair your window credit with other energy efficiency tax credits. This can help you spread installations — such as solar panels, a water heater, a geothermal heat pump, or a new central air conditioner — across multiple tax years to make the most of the credits.

Tax professionals also stay current on any changes to the credit rules, which proves helpful since energy efficiency programs sometimes get updated or extended by congress. This is worth the extra cost if you’re claiming multiple credits.

Eligible Window Types and Materials

Both replacement windows and new construction windows can qualify for the tax credit. Whether you’re swapping out old windows in existing openings or adding windows to a new addition (or a new build), the same rules apply: The windows only need to meet those ENERGY STAR Most Efficient performance standards.

Frame material doesn’t determine eligibility, which gives you flexibility in choosing windows that match your home’s style and your budget. Vinyl windows, wood windows, fiberglass windows, and composite windows can all qualify as long as they hit the required U-Factor and SHGC numbers. The credit applies to traditional windows as well as skylights and exterior doors with windows.

A vinyl window meeting the 0.20 U-Factor and 0.20 SHGC requirements in a Northern climate zone will qualify, while a beautiful wood window that doesn’t hit those numbers won’t. You should always ask about National Fenestration Rating Council (NFRC) performance ratings before making any purchasing decisions, regardless of what the windows are made from.

Brand names, colors, or special features like between-the-glass blinds don’t factor into IRS eligibility. The NFRC label, which indicates that your windows meet the minimum performance thresholds, is all that counts. Some of the most affordable window lines from major manufacturers now offer models that qualify, so you don’t necessarily need to buy the most expensive option to get the credit.

Can You Claim the Credit if You DIY?

Yes, you can claim the window tax credit even if you install the windows yourself. The IRS allows DIY installations, but you should be aware of some practical considerations before attempting your first window replacements. You can only claim the cost of the window materials — your own labor has no dollar value for tax credit purposes, which actually works in your favor if you’re not paying for professional installation anyway.

Keep every receipt and make sure you have all the manufacturer documentation proving your windows meet ENERGY STAR Most Efficient standards. Documentation becomes more important with DIY projects because you won’t have a contractor helping you track down certification paperwork.

I’ve read enough DIY horror stories and talked to my neighbor who attempted his own window installation to learn some hard lessons: If you mess up the installation, you could negate both the energy savings and void your warranty. Most window manufacturers require proper installation techniques to maintain their warranties, and poor installation can create air leaks that reduce your windows’ performance. While you can still claim the tax credit regardless of installation quality and air sealing, you might not get the energy savings you’re paying for.

Next Steps

Installing energy-efficient windows can reduce your energy costs and earn you a tax credit, but only if you meet the IRS requirements. Planning ahead is essential. Make sure your contractor quotes ENERGY STAR Most Efficient certified products. Additionally, ask for the manufacturer certification documents upfront, and get itemized receipts that separate materials from labor costs. Don’t forget to save your paperwork and plan to file IRS Form 5695 when you do your taxes. Sounds like a lot, but it’s really not that bad once you get organized.

The dual financial benefit of lower energy bills and tax savings makes window replacement one of the smartest home upgrades you can make right now. With the credit available through 2032 and no lifetime limit, you have plenty of time to plan your window replacements strategically. Whether you tackle the whole existing home at once or spread the work across multiple years to maximize your credits, upgrading to energy-efficient windows pays off both immediately and over the long term.

FAQs About the Window Tax Credit