Energy-Efficient Window Tax Credits in California

What Is the Federal Energy-Efficient Window Tax Credit?

The federal government offers homeowners a valuable tax credit for installing energy-efficient windows through the Energy Efficient Home Improvement Credit (Section 25C) of the Internal Revenue Code. This credit was significantly expanded by the Inflation Reduction Act of 2022 and is available through at least 2032.

For Southern California homeowners replacing old, inefficient windows, this credit can offset a meaningful portion of your project cost — making it one of the best times in decades to upgrade your home’s windows.

How Much Can You Save?

Under the current Section 25C credit structure:

• Up to $600 per year for qualifying energy-efficient windows and skylights
• Up to $500 per year for qualifying exterior doors (limit of $250 per door)
• Overall annual cap of $1,200 for the combined energy-efficient home improvement credit (which also includes insulation, HVAC systems, and other qualifying improvements)
• The credit resets each tax year, meaning you could potentially claim it across multiple years if you phase your project

This is a tax credit, not a deduction — meaning it reduces your tax bill dollar-for-dollar. A $600 credit saves you $600 in taxes owed, regardless of your tax bracket.

Which Windows Qualify for the Tax Credit?

To qualify for the Section 25C credit, replacement windows must meet ENERGY STAR Most Efficient criteria. The specific performance requirements vary by climate zone. Southern California falls primarily into Climate Zones 3 and 4, where qualifying windows must meet these minimum standards:

• U-Factor: 0.25 or below (measures how well the window insulates)
• Solar Heat Gain Coefficient (SHGC): 0.25 or below (measures how much solar heat passes through)
• Windows must be ENERGY STAR Most Efficient certified for the year they are installed
• Must be installed in the taxpayer’s primary residence (not rental properties or new construction)

Milgard windows — the brand Window Design Group exclusively installs — offers multiple product lines that meet or exceed ENERGY STAR Most Efficient requirements for Southern California, including their Tuscany, Trinsic, and Ultra series with appropriate glass packages.

How to Claim the Window Tax Credit

Claiming the energy-efficient window tax credit involves several steps. Again, we strongly recommend working with your CPA or tax preparer throughout this process:

1. Verify qualification before purchase. Confirm that the specific window products you are considering meet ENERGY STAR Most Efficient criteria for your climate zone. Your Window Design Group consultant can help identify qualifying products during your free in-home estimate.
2. Keep your documentation. Save your contract, invoices, and receipts showing the total cost of windows and installation. You will also need the Manufacturer’s Certification Statement, which confirms the products meet the required energy performance standards.
3. File IRS Form 5695. When filing your federal tax return, complete Part II of IRS Form 5695 (Residential Energy Credits) to calculate and claim the credit.
4. Apply the credit. Transfer the calculated credit amount to your Form 1040. The credit will reduce your tax liability for that filing year.

Important Things to Know

• The credit applies to products AND installation labor costs for windows (unlike some other home improvement credits)
• The credit is non-refundable — it can reduce your tax liability to zero but will not generate a refund beyond what you owe
• Only windows installed in your primary residence qualify (second homes and rental properties are excluded)
• The home must be an existing home — new construction does not qualify for Section 25C
• No income limits apply to this credit
• The credit has been extended through December 31, 2032, though future legislation could modify or extend it further

California State Incentives

In addition to the federal tax credit, California homeowners may have access to additional energy efficiency incentives:

• Utility rebate programs — Southern California Edison (SCE), SoCalGas, and other local utilities periodically offer rebates for energy-efficient home improvements including windows
• PACE financing — Property Assessed Clean Energy programs allow homeowners to finance energy improvements through their property tax bill
• Local incentive programs — Some cities and counties in the Los Angeles, Ventura, Orange, San Bernardino, and Riverside County areas offer additional incentives for energy upgrades

Check with your local utility provider and the Database of State Incentives for Renewables & Efficiency (DSIRE) for current programs available in your area.

Combine Tax Credits with Financing for Maximum Savings

Window Design Group partners with Wells Fargo to offer 0% interest financing for 12 to 84 months on qualifying window and shutter projects. When you combine affordable monthly payments with federal tax credits, upgrading your home’s windows becomes more accessible than ever.

Consider this example: If your window replacement project costs $6,000 and you claim the full $600 tax credit, your effective cost drops to $5,400 — spread across comfortable monthly payments with zero interest.

Want to know exactly what replacement windows cost? Read our complete pricing guide for Southern California.

Get a Free Estimate from Window Design Group

Window Design Group has been helping Southern California homeowners upgrade their windows since 1972. As a certified Milgard dealer, we install high-performance, energy-efficient windows that meet the strictest ENERGY STAR standards — and our team can help you understand which products qualify for the federal tax credit.

We serve homeowners across Los Angeles County, Ventura County, Orange County, San Bernardino County, and Riverside County. Call us at (800) 577-0643 or fill out our contact form to schedule your free in-home consultation.