What is a Window Tax Credit?

Mary McMahon
Mary McMahon

A window tax credit is a benefit available to people who install energy-efficient windows in a structure. In any given tax year, people can usually access a number of different tax benefits, and they can check with authorities to see if a window tax credit is available, and learn more about the details. Tax accountants usually also have ample information on the subject and can help people maximize claims for credits and deductions. In some cases, it may be possible to claim a retroactive credit if someone failed to act in a year when the credit was available.

People who install energy-efficient windows may be eligible to receive a window tax credit.
People who install energy-efficient windows may be eligible to receive a window tax credit.

It is important to distinguish between a tax credit and a tax deduction. A tax credit offsets someone's total tax due by the amount of the credit. Someone who owes $300 United States Dollars (USD) and gets a $200 USD tax credit would only owe $100 USD, for example. Tax deductions allow people to subtract from their taxable income, reducing overall tax liability. It may be possible to receive both tax deductions and tax credits for home improvement projects, although people cannot claim something twice.

In a tax year when a window tax credit is available, if people install an approved energy-efficient window system and retain the documentation, they can claim a tax credit. Sometimes, people can subtract the full cost of the windows, and in others, there may be a cap on the amount they can claim. If someone has no tax due, the government will issue a tax refund in the amount of the credit. The window tax credit may only apply to certain kinds of windows and structures, and it is important to get information about it before starting a project to make sure it will meet the government's standards.

Governments offer such programs as an incentive to improve energy efficiency. People might not be able to afford home modifications or might have little interest in them without support from the government. Making money available through a tax credit and publicizing it allows the government to improve overall energy efficiency. This will cut down on infrastructure and maintenance costs, making the expenditure advantageous for the government in the long term.

If a window tax credit is not available, people can claim home improvement like new window installations on a tax return as a deduction, in some cases. Necessary maintenance of income property, for example, is a business expense. A landlord who improves a property in some way can claim the expense, arguing that it is necessary to keep the property usable and appealing to tenants.

Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a wiseGEEK researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

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