SECTION 2. BACKGROUND

.01 Inflation Reduction Act Changes to § 25C .

(1) Congress originally enacted § 25C in § 1333(a) of the Energy Policy Act of 2005, Public Law 109-58, 119 Stat. 594, 1026 (August 8, 2005) to provide a “nonbusiness energy property credit” for the purchase and installation of certain energy efficient improvements in a tax

payer’s principal residence (§ 25C credit). Congress amended § 25C several times, most recently by § 13301 of Public Law 117-169, 136 Stat. 1818, 1941 (August 16, 2022), commonly known as the Inflation Reduction Act of 2022 (IRA), which renamed this provision the “energy efficient home improvement credit.”

(2) Former § 25C expired with respect to any property placed in service after December 31, 2021. Section 13301(i) of the IRA provides that except as otherwise provided in § 13301(i)(2) and (3), the IRA amendments to § 25C apply to property placed in service after December 31, 2022. Section 13301(i)(2) of the IRA provides that the amendments made by § 13301(a) of the IRA apply to property placed in service after December 31, 2021. Section 13301(a) of the IRA extended the § 25C credit with respect to any property placed in service through December 31, 2032. Section 13301(i)(3) of the IRA provides that the amendments made by § 13301(g) of the IRA apply to property placed in service after December 31, 2024. Section 13301(g) of the IRA amended § 25C by redesignating former subsection (h) as subsection (i) and inserting a new subsection (h), which is described in section 2.02 of this revenue procedure.

(3) Section 25C, as amended by § 13301(b) and (f) of the IRA, allows an individual taxpayer (taxpayer) for the taxable year a credit equal to 30 percent of the total amount paid or incurred by the taxpayer during such taxable year for qualified energy efficiency improvements installed during such taxable year, residential energy property expenditures, and home energy audits. As amended by § 13301(c) of the IRA, the amount of the § 25C credit generally is limited under section 25C(b)(1) to $1,200 with respect to any taxpayer for any taxable year. Within this $1,200 limitation, § 25C(b) sets forth further annual limitations for certain categories of improvements. Section 25C(b) (2) provides that the credit allowed under § 25C(a)(2) is limited to $600 with respect to any taxpayer for any taxable year with respect to any item of qualified energy property. Section 25C(b)(3) provides that the credit allowed under § 25C(a)(1) with respect to any taxpayer for any taxable

1 Unless otherwise specified, all “Section” or “§” references are to sections of the Code.

Bulletin No. 2024–46 1113 November 12, 2024

year is limited to $600 in the aggregate with respect to all exterior windows and skylights. Section 25C(b)(4) provides that the credit allowed under § 25C(a)(1) with respect to any taxpayer for any taxable year is limited to $250 in the case of any exterior door and $500 in the aggregate with respect to all exterior doors. Section 25C(b)(6) limits the credit allowed under § 25C(a)(3) for a home energy audit to $150. Additionally, notwithstanding the general $1,200 annual limitation (and the internal limitations within the general $1,200 annual limitation), § 25C(b) (5) provides that the credit allowed under § 25C(a)(2) with respect to any taxpayer for any taxable year is limited to $2,000 in the aggregate with respect to amounts paid or incurred for an electric or natural gas heat pump water heater described in § 25C(d)(2)(A)(i), an electric or natural gas heat pump described in § 25C(d) (2)(A)(ii), and a biomass stove or boiler described in § 25C(d)(2)(B).

.02 Section 25C(h) Requirements . (1) Section 25C(h)(1) provides that no § 25C credit is allowed with respect to any item of specified property placed in service after December 31, 2024, unless—

(a) such item is produced by a QM, and (b) the taxpayer includes the PIN of such item on the tax return for the taxable year.

(2) Section 25C(h)(2) defines the term “qualified product identification number” as, with respect to any item of specified property, the product identification number that the QM assigned to such item pursuant to the methodology referred to in § 25C(h)(3).

(3) Section 25C(h)(3) defines the term “qualified manufacturer” as any manufacturer of specified property that enters into an agreement with the Secretary of the Treasury or the Secretary of the Treasury’s delegate (Secretary) that provides that such manufacturer will—

(a) assign a product identification number to each item of specified property produced by such manufacturer, using a methodology that will ensure that such number (including any alphanumeric) is unique to each such item, by using numbers or letters unique to such manufacturer or by such other method as the Secretary may provide (PIN assignment requirement),

(b) label such item with such product identification number in such manner as the Secretary may provide (PIN labeling requirement), and

(c) make periodic written reports to the Secretary (at such times and in such manner as the Secretary may provide) of the product identification numbers so assigned and including such information as the Secretary may require with respect to the items of specified property to which such product identification numbers were so assigned (periodic written report requirement) (collectively, QM PIN requirements).

(4) Section 25C(h)(4) defines the term “specified property” as—

(a) any “qualified energy property,” and

(b) exterior windows (including skylights) and exterior doors described in § 25C(c)(3)(B) and (C).

(5) Section 25C(d)(2) defines the term “qualified energy property” as any of the following:

(a) Any of the following that meet or exceed the highest efficiency tier (not including any advanced tier) established by the Consortium for Energy Efficiency that is in effect as of the beginning of the calendar year in which the property is placed in service:

(i) An electric or natural gas heat pump water heater.

(ii) An electric or natural gas heat pump.

(iii) A central air conditioner. (iv) A natural gas, propane, or oil water heater.

(v) A natural gas, propane, or oil furnace or hot water boiler.

(b) A biomass stove or boiler that— (i) uses the burning of biomass fuel to heat a dwelling unit located in the United States and used as a residence by the taxpayer, or to heat water for use in such a dwelling unit, and

(ii) has a thermal efficiency rating of at least 75 percent (measured by the higher heating value of the fuel).

(c) Any oil furnace or hot water boiler that—

(i) is placed in service after December 31, 2022, and before January 1, 2027, meets or exceeds 2021 Energy Star certified efficiency criteria, and is rated by the manufacturer for use with fuel blends at

least 20 percent of the volume of which consists of an eligible fuel (defined in § 25C(d)(3)) (eligible fuel), or

(ii) is placed in service after December 31, 2026, achieves an annual fuel utilization efficiency rate of not less than 90, and is rated by the manufacturer for use with fuel blends at least 50 percent of the volume of which consists of an eligible fuel.

(d) Any improvement to, or replacement of, a panelboard, sub-panelboard, branch circuits, or feeders that—

(i) is installed in a manner consistent with the National Electric Code,

(ii) has a load capacity of not less than 200 amps, (iii) is installed in conjunction with— (I) any qualified energy efficiency improvements, or

(II) any qualified energy property described in § 25C(d)(2)(A) through (C) for which a § 25C credit is allowed for expenditures with respect to such property, and

(iv) enables the installation and use of any qualified energy efficiency improvements or any qualified energy property described in § 25C(d)(2)(A) through (C).

.03 Proposed Regulations . In conjunction with the publication of this revenue procedure, the Department of the Treasury (Treasury Department) and the IRS are publishing a notice of proposed rulemaking (REG-118264-23) in the Fed- eral Register (89 F.R. 85099) under § 25C (proposed regulations). The proposed regulations would provide rules for manufacturers of specified property to register to be qualified manufacturers and satisfy certain other requirements, and rules for taxpayers to calculate the credit.