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Renewable Energy and Energy Efficiency Tax Incentives
Energy Efficiency Rebate Programs
Some utilities offer rebates for energy efficiency purchases. Contact your utility provider for specific information. To help you find the right rebates for you, the U.S. Department of Energy has developed an “Energy Star Rebate Finder.” Just go to www.energystar.gov/rebate-finder and enter your ZIP code.
Energy Efficiency Tax Credits
As part of the Inflation Reduction Act (IRA) of 2022, federal tax credits for energy efficient home upgrades were extended. If you made any qualifying home improvements to your primary address after Dec. 31, 2021, you may be eligible to claim credit when you file your 2022 federal taxes. A wide range of ENERGY STAR-certified products can qualify for a federal tax credit, including both interior upgrades like a new heat pump or water heater and improvements to your home’s exterior like new windows, doors, insulation and roofing. To learn more about what tax credits you may be eligible to claim, visit the equipment tax credit guidance page on the ENERGY STAR website.
To apply any qualifying tax credit to your 2022 tax return, you’ll need to download and complete the 2022 version of IRS Form 5695: Residential Energy Credits. If you have questions during this process, contact the Internal Revenue Service (IRS) or a tax professional for more information.
Renewable Energy Tax Credits
Tax credits for residential renewable energy products are available through Dec. 31, 2023. Under the Consolidated Appropriations Act of 2021, the renewable energy tax credits for fuel cells, small wind turbines, and geothermal heat pumps now feature a gradual step down in the credit value, the same as those for solar energy systems. Beginning in 2021, biomass fuel stoves are also included in tax credits for residential renewable energy products.
South Dakota Property Tax Exemption
South Dakota state law SDCL 10-4-44 provides a local property tax exemption for renewable energy systems less than 5 megawatts in size. Wind, solar, biomass, hydrogen, hydroelectric and geothermal systems used to produce electricity or energy are considered renewable resource systems. The continuous exemption applies to the first $50,000 or 70% of the assessed value of the renewable energy property, whichever is greater. For geothermal systems that produce energy only and no electricity, such as geothermal heat pumps that produce energy, but not electricity, the exemption is limited to the first four continuous years for residential facilities and the first three continuous years for commercial facilities. Contact the South Dakota Department of Revenue or your local Director of Equalization for more information.
For More Information
The American Council for an Energy-Efficient Economy’s Smarter House website provides consumers and businesses with practical information to help you make wise investment decisions and decide which products to buy and how to use them for maximum energy savings.
Rev. 10/22
