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7 Ways to Maximize Your Tax Refund in 2023

January 6, 2023 · Personal Finance, Saving & Spending
tax-4
Photo by Ground Picture from Shutterstock

#4 Improve the Energy Efficiency of Your Home

Making your house “greener” is now significantly encouraged under the American Recovery and Reinvestment Act of 2009. The bill doubles the number of tax credits available for improving your home’s energy efficiency, while the percentage return has been reduced from its peak of 30% for upgrades completed before 2020. 

Your tax bill will be affected by tax credits more than by deductions. Tax credits immediately reduce your tax burden, whereas deductions lower your level of taxable income.

If done before January 1, 2023, installing a geothermal heat pump, solar energy system, or wind turbine will now qualify you for a 26% cost refund. The credit decreases the following year to 22%. Installing solar panels typically costs $14,100 in California. Your taxes would be reduced by $3,666 if you made that repair to your house in 2022.

Alternative energy isn’t the only type of energy improvement tax credit available. Tax credits are also available for the simple installation of new, Energy Star-certified furnaces and boilers, though they are less substantial than those for alternative energy. Not all Energy Star-certified products are qualified, so be careful to read the company’s tax certification statement.

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