SAVE BIG BY GOING GREEN AT HOME

New legislation is packed with tax breaks for homeowners who upgrade to energy-efficient systems and appliances. Bonus: You'll slash your utility bills.

- DANIEL BORTZ

There has never been a better time to make your home more energy efficient. The Inflation Reduction Act, signed into law last year, is a game changer for homeowners looking to make green home improvements and save money on utility bills. "It's a monumental piece of tax legislation" that's packed with tax credits and deductions, says Mark Steber, chief tax officer at Jackson Hewitt.

At the same time, the new law has "a lot for homeowners to parse through, and there are a lot of nuances for what qualifies and what doesn't qualify for a tax break," Steber says.

If you're thinking of purchasing an energy-efficient appliance or system, here's what you need to know to squeeze the most savings out of the Inflation Reduction Act, along with tips on four common green home-improvement projects.

SAY FAREWELL TO LIFETIME LIMITS 

Until the end of 2021, homeowners could claim a credit for up to 10% of the cost of installing certain energy-efficient insulation, windows, doors, roofing and other home improvements. But the credit was capped at a modest lifetime limit of $500, with a $ 300-lifetime limit for windows.

That's no longer the case. The Inflation Reduction Act's Energy Efficient Home Improvement Credit lets homeowners-no matter their income-claim a tax credit for up to 30% of the cost of qualifying home improvements, up to $1,200 per year. (A credit is a dollar-for-dollar reduction in your tax bill.)

However, there are annual dollar limits for certain items: