Five Energy-Efficient Home Improvements to Save Money

Plenty of home improvement projects that seem costly can actually save you money in the long run. That’s because groups like the U.S. Department of Agriculture Programs and Grants and the U.S. Energy Department regularly offer residential energy credit incentives and perks as a way to get more homeowners to reduce their carbon footprints. Increasing energy efficiency for your home can reduce both your energy usage and utility bills. 

But there are a lot of home improvement opportunities to choose from. To help narrow things down, we’ve compiled a list of the top five energy efficient home improvements to make in 2024 for government incentives, tax breaks, and rebates. 

Heating and Cooling

Why to Make the Change:

Air conditioning and heating systems work hard to make sure our homes are comfortable all year long. But it comes at a cost. In fact, HVAC systems usually use the largest amount — about 35–40% — of energy within a home. It’s worth considering replacing your unit if the system is over 10 years old, racking up frequent or costly repairs, or is posing challenges when it comes to regulating your home’s temperature.

If your system is 10 years old or more, a newer system can reduce your utility expenses by about 20%.  Those long-term savings can add up to several hundreds of dollars annually.

Available Incentives and Rebates: 

Local utility companies will typically offer rebates for high-efficiency AC systems — including those with a SEER rating of 15 or higher. Because deals vary by region, it’s best to contact your local energy provider. Ask which rebates on new AC units are available where you live.

The Department of Energy also has a searchable rebate database, based on zip code. 

There’s also a number of federal incentives offered by the government for energy-efficient home improvements, including new HVAC systems. The Database of State Incentives for Renewables & Efficiency has a searchable by zip code list of energy-efficient incentives available in your area.

2024 Homeowner Savings Guide

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Solar Energy

Why Make the Change:

Climbing electricity costs are usually the reason homeowners begin exploring solar energy. In fact, a recent Modernize homeowner survey revealed that nearly 80% of homeowners cited wanting to save money on utility and electric bills as the primary motivating factor for beginning a solar energy project. 

Savings generated from solar energy will vary depending on the time of year, region, and the panels’ footprint. But it is possible for homeowners to save as much as $40,000 within 20 years. 

Available Incentives and Rebates:

Tax incentives for solar projects have been an enticing perk for homeowners for years now. Under the Residential Renewable Energy Tax Credit solar installations from 2020-2021 received a 26% tax credit, while an August 2022 Congress decision raised it to 30% for systems from 2022-2032. This credit reduces to 26% in 2033, 22% in 2034, and expires in 2035 unless renewed.

Additional incentives available to homeowners can depend on the region you live in. The Database of State Incentives for Renewables & Efficiency lists a number of federal financial incentives that can benefit homeowners. Modernize recommends discussing rebates and additional incentives with your solar installer to ensure a clear understanding about how incentives will apply to your future expenses.

Window Replacements

Why Make the Change:

When it comes to your home’s overall energy-efficiency, windows are an important factor because of the amount of air that can leak in and out. In fact, a Department of Energy report says that windows are responsible for about 25–30% of residential heating and cooling use.

That means, even if your HVAC system is newer, your windows may be harming your home’s efficiency and ability to regulate temperatures within. 

Energy efficient — also known as energy saving — windows are designed to keep your home better insulated, and in turn, save you money.

Energy Star windows, which follow strict energy efficiency guidelines put in place by the U.S. Environmental Protection Agency, can save homeowners in cooler climates an average of 12% on energy costs. Conversely, windows with low-emissivity coatings (think sunscreen for your windows) can keep homes in warmer climates regulated inside by reflecting air conditioning back into a home’s interior and reducing solar heat gain.

Available Incentives and Rebates:

Energy efficient window replacements can be eligible for various tax benefits and incentives, including the nonbusiness energy property tax credit. 

An Energy Star tax credit is available for anyone installing Energy Star windows in their homes for a maximum amount of $600. On top of this, you may have opportunities for local tax credits. For example, mail-in rebate programs for Energy Star windows are being observed in areas including West Oregon and Colorado Springs. Some locations will also offer low-interest loans to encourage homeowners to upgrade. Modernize recommends checking in with local window installers and distributors to find out what incentives and rebates are available in your area.

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Roofing

Why Make the Change:
Believe it or not, your roof can have huge impacts on your home’s energy-efficiency and, in turn, your electric bills. That’s because unless your roof is constantly in the shade, it is exposed to direct sunlight for hours a day. That exposure increases your home’s internal temperature and will cause your HVAC system to work harder.

For that reason, “cool roofs” are lauded for their ability to reflect sunlight, absorb less heat than a standard roof, and keep your home at a comfortable temperature with the help of a special coating or specialty tiles. Cool roofs can keep a home at least 50 degrees cooler, saving both energy and money along the way. An Energy Star study reported that an energy-efficient roof can save peak A/C demand by as much as 15%.

Available Incentives and Rebates:

To date, there are fewer tax incentives for energy-efficient roof replacements compared to several years ago. But that doesn’t mean there aren’t any financial opportunities to save. In some cases, solar roofing tiles and solar roofing shingles may qualify for a residential energy efficient property tax credit, the Internal Revenue Service (IRS) said. It is important for homeowners to consult with a trusted roofing contractor. They can help you to understand what types of local and regional incentives may be available.

Home-Wide Upgrades 

Why Make the Change:

It’s uncommon knowledge that some home improvements can be eligible for tax deductions. It typically depends on if those projects fall into the “capital improvement” or “repair categories.”

Capital improvements are defined as anything that makes your home more desirable and can increase the property value. It doesn’t include something like fixing a broken pipe, but would include adding a pool or an outdoor barbecue station. Those upgrades can qualify for tax deductions.

Available Incentives and Rebates:

Along with things we’ve gone over already, like upgrading windows or HVAC systems, there are several additional home improvement projects that constitute capital improvements. They include things like adding a stairlift or adding a home office. 

Medical home improvements can be a write-off during tax season as a medical expense. In addition to installing a stairlift, other examples include widening doorways for wheelchair access or adding a walk-in tub. The improvement project has to be something you can prove a doctor has prescribed as necessary for your health.

Home office upgrades can also qualify for a tax write-off.  However, it needs to be a dedicated office space. That means it cannot be a corner in a multi-use room or a dining room table that also functions as a desk. If you have a free-standing space that can be used 100% for work purposes — like a workshop or office — upgrades to the space can qualify for a tax write-off. 

With all these residential energy credits at your fingertips, you can pick the home improvement that will save you the most energy and the most money.