45L Tax Credits for Zero Energy Ready Homes
Disclaimer: This webpage provides an overview of the DOE Zero Energy Ready Home program and how it relates to the New Energy Efficient Home Tax Credit found in section 45L of the Internal Revenue Code. The information provided here does not constitute professional tax advice or other professional financial guidance. It should not be used as the only source of information when making decisions regarding design, purchasing, investments, or the tax implications of new home construction, or when executing other binding agreements. In the event that there is conflict between information provided on this webpage and guidance or notices published by IRS, the information published by IRS shall take precedence.
The Updated Section 45L
The Inflation Reduction Act of 2022 (IRA) amended Internal Revenue Code Section 45L to provide taxpayers with a tax credit for eligible new or substantially reconstructed homes that meet applicable ENERGY STAR home program or DOE Zero Energy Ready Home (ZERH) program requirements. The new 45L provisions include two tiers of credits, with the higher credits for eligible homes and dwelling units certified to applicable ZERH program requirements. The 45L credit is $5,000 for single family and manufactured homes eligible to participate in the EPA’s ENERGY STAR Residential New Construction Program or the ENERGY STAR Manufactured New Homes Program, respectively, and which are certified to applicable ZERH program requirements. The 45L credit is $1,000 for dwelling units that are part of a building eligible to participate in the ENERGY STAR Multifamily New Construction Program, and which are certified to applicable ZERH program requirements, unless the project meets prevailing wage requirements, in which case the 45L credit is $5,000 per dwelling unit. These new 45L rules apply to qualified energy efficient homes acquired after December 31, 2022, and before January 1, 2033, for use as a residence during the taxable year. DOE continues to coordinate with the Internal Revenue Service (IRS) regarding forthcoming IRS 45L guidance.
DOE Zero Energy Ready Home (ZERH) Program Applicability for 45L Tax Credit, by Calendar Year
ZERH program requirements vary by housing sector. To improve the usability of the program requirements and the certification process for different sectors, DOE is developing and maintaining program requirements documents for each major housing sector. DOE anticipates updating these documents over the coming years, with new editions of the requirements referred to as versions.
The three housing sector tables below indicate DOE’s anticipated version release schedule for the ZERH program. The certification requirements for each housing sector are included below with links to detailed requirements documents (PDF) for each program version. IRS guidance will establish when a dwelling unit needs to be certified to the version in effect for that housing sector as listed below to qualify for the ZERH provisions of 45L tax credit. The tables list all current and planned versions through 2025, by Calendar Year (January 1-December 31). In conjunction with IRS, DOE will provide additional information on any planned ZERH program changes beyond 2025 on future dates to be determined. Note, for certain future planned versions the requirements documents are still under development.