Updated FAQs were released to the public in Fact Sheet 2024-15 PDF, April 17, 2024. Q1. May a taxpayer include labor costs when calculating the credits? (added December 22, 2022) A1. The rules vary by credit. When calculating the Energy Efficient Home Improvement Credit, a taxpayer may include the labor costs for the onsite preparation, assembly, or original installation of residential energy property such as central air conditioners; natural gas, propane, or oil water heaters; natural gas, propane, or oil furnaces or hot water boilers; electric or natural gas heat pumps; electric or natural gas heat pump water heaters; biomass stoves or biomass boilers; or improvements to panelboards, sub-panelboards, branch circuits, or feeders. In contrast, a taxpayer may not include the labor costs for qualified energy efficient building envelope components including a qualifying insulation material or system, exterior window, skylight, or exterior door. Thus, for an energy efficient building envelope component for which a taxpayer pays a fixed price, the taxpayer must make a reasonable allocation between the qualifying cost of the property and the nonqualifying labor cost of the installation. When calculating the Residential Clean Energy Property Credit, a taxpayer may include the labor costs properly allocable to the onsite preparation, assembly, or original installation of the qualified property and for piping or wiring to interconnect the qualifying property to the home. Related Energy Efficient Home Improvement: Qualifying Expenditures and Credit Amount Residential Clean Energy Property: Qualifying Expenditures and Credit Amount Energy Efficiency Requirements Qualifying Residence Labor Costs Timing of Credits General Questions Examples Previous updates to FAQs Fact Sheet 2022-40 PDF, Dec. 22, 2022
