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$300 Federal Water Heater Tax Credit [2022 and Earlier]

Is your water heater eligible for a $300 tax credit?

For full information on all federal tax credits, visit

Is Your High-Efficiency Water Heater Eligible for a Tax Credit?

JANUARY 2023 UPDATE: We have another article with 2023 information about the new water heater tax credits available under the Inflation Reduction Act.

For the 2022 tax year and earlier, keep reading this article. TheNon-Business Energy Property Tax Credits have been extended to apply retroactively to qualifying non-solar water heaters (electric heat pump (hybrid), gas, oil, or propane) and other energy efficient appliances placed in service through December 31, 2022.

What is the Tax Credit?

Tax Credit: $300 (Maximum of $500 for all energy efficiency improvements claimed under this credit)
Expires: December 31, 2022
Details: Equipment must be installed in an existing home & your principal residence. New construction and rentals do not apply.

What are the Requirements?

Please consult a tax professional to ensure that you meet all of the requirements necessary to receive the tax credit. Additionally, to verify equipment eligibility, ask your plumber to provide the Manufacturer Certification Statement for the water heater you purchased or plan to purchase.

NOTE: You may claim up to a total lifetime credit of $500. If you’ve already claimed $500 under the Non-Business Energy Property Tax Credits since 2005, you won’t be eligible to claim any more credits.

Electric Heat Pump Water Heaters

In order to receive a tax credit of $300, the electric heat pump (hybrid) water heater must meet the following criteria:

  • Uniform Energy Factor (UEF) >= 2.2

Gas, Oil or Propane Water Heaters

The following criteria must be met in order to receive a tax credit of $300:

  • Uniform Energy Factor (UEF) >= 0.82
  • OR a thermal efficiency of at least 90%.

According to, most ENERGY STAR certified water heaters meet the requirements of this tax credit. 

How Do I Apply?

File IRS Form 5695 with your tax return. The credit amounts you may receive are subject to IRS regulations, so we recommend consulting a tax professional for advice on tax preparation.

To What Other Appliances Does the Tax Credit Apply?

Even if you don’t plan on upgrading your water heater, you might intend to purchase another qualifying household appliance like an air conditioner or heat pumpCheck the entire list of qualifying appliances.

For full information on all federal tax credits, visit

Call Ray’s Complete Plumbing today for a free quote on a new electric heat pump water heater: (941) 205-2133

*Disclaimer: The tax credit information contained within this website is provided for informational purposes only and is not intended to substitute for expert advice from a professional tax/financial planner or the Internal Revenue Service (IRS).

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