Is there a credit for electric water heater

Yes, there is a credit for certain energy-efficient electric heat pump water heaters, that could potentially save you up to 30% of the cost, with a maximum of $2,000 per year.

To qualify for the tax credit, the water heater must meet specific energy efficiency standards, often based on the UEF (Uniform Energy Factor) rating. 

The Inflation Reduction Act of 2022 expanded the Energy Efficient Home Improvement Credit, making it easier to claim credits for energy-efficient home improvements, including water heaters.

You'll need to file IRS Form 5695 with your tax return to claim the credit. TurboTax will generate this form for you.

To get to your Home Energy credit section of TurboTax you can do the following:

You can do this in TurboTax Desktop:

1. Click on the tab (top screen gray bar) "Deductions & Credits"
2. Under the Section "Your Home"
3. Click on "Start" or "Update" next to "Home Energy Credits"
4. Answer all follow-up questions in TurboTax.

You can do this in TurboTax Online:

1. Continue where you left off
2. Click on "Deductions & Credits" in the left panel
3. Scroll down the page to find "Your Home"
4. Click on the (down-facing caret)
5. Scroll down to "Home Energy Credits"
6. Click on "Revisit"
7. Answer all follow-up questions in TurboTax.

Click here for Energy-Efficient Home Improvement Credit

Click here for 2024-2025 Energy Tax Credit: Which Home Improvements Qualify?