The 45L Tax Credit

What is the 45L tax credit for energy-efficient homes?

The Section 45L tax credit is a federal incentive that provides up to $5,000 per unit to builders or developers of new energy-efficient residential homes or apartments. To qualify, each unit must meet ENERGY STAR® or Zero Energy Ready Home (ZERH) standards, depending on the year and program applied.

This credit supports sustainable construction across the U.S., from townhome developments in California to multifamily housing in Florida. It’s especially valuable for projects that prioritize energy savings without significantly increasing construction costs, helping developers improve margins while reducing carbon impact.

Who qualifies for the 45L credit in 2025?

In 2025, developers, builders, and contractors who construct or manufacture new residential homes or apartments that meet approved energy efficiency standards can qualify for the 45L tax credit. The credit applies to single-family homes, low-rise multifamily, and even certain manufactured homes if built to ENERGY STAR or ZERH standards.

Whether you're building a multifamily project in Texas or modular homes in the Midwest, 45L is available nationwide. The credit is claimed in the year the home or unit is sold or leased to a tenant, and each qualifying unit can receive a separate credit—making it highly valuable for volume builders.

Are 45L credits refundable or transferable?

The 45L credit is non-refundable and not transferable in most cases. This means it can only be used to offset federal income tax liability and does not result in a cash refund if no tax is owed. However, unused credits may be carried forward to future tax years for up to 20 years, allowing builders to still capture value when future income is generated.

While not transferrable like some newer clean energy credits, 45L remains a powerful tool for eligible developers across the U.S. to reduce tax liability—especially when coordinated with other incentives such as cost segregation or ITC.

How does the 45L credit work if I don’t owe taxes this year?

If you don’t have federal tax liability in the year you claim the 45L credit, you won’t receive an immediate cash benefit—but the unused portion can be carried forward for up to 20 years. This allows developers and pass-through entities like LLCs and partnerships to still benefit over time as income is generated.

For example, if you're building a 60-unit apartment complex in Arizona and claim $300,000 in 45L credits but have limited income this year, you can apply the credits to future years when revenue increases—ensuring long-term tax efficiency.

What’s the difference between 45L and 179D?

 Both 45L and 179D are federal incentives for energy-efficient construction, but they apply to different types of buildings and offer different benefits.

45L is a tax credit of up to $5,000 per residential unit, aimed at developers and builders of energy-efficient homes and low-rise apartments.

179D is a tax deduction of up to $5.81 per square foot for qualifying improvements to commercial buildings or government-owned properties.

In general, 45L supports residential projects like townhomes, apartments, and subdivisions, while 179D is more commonly used for offices, warehouses, and schools. In some mixed-use or large developments, both may apply—depending on how the spaces are designed and owned.

Can I claim 45L, 179D, and Cost Segregation together?

Yes, in many cases, 45L, 179D, and Cost Segregation can all be used together on the same project—as long as you’re not double-counting the same components or units. The 45L credit applies on a per-unit basis for qualifying residential dwellings, while 179D covers commercial spaces or shared systems within certain multifamily properties.

Cost Segregation allows developers to accelerate depreciation of eligible personal property like flooring, appliances, and site improvements. For example, if you're developing a 5-story apartment building with ground-floor retail in a city like Denver or Atlanta, you could claim 45L for the residential units, 179D for the retail and common areas, and apply cost segregation to optimize depreciation of fixtures and finishes. Coordinating these incentives effectively requires thoughtful planning but can significantly improve overall project returns.

Do apartments or townhomes qualify for the 45L credit?

Yes. Apartments, condominiums, townhomes, and single-family detached homes can all qualify for the 45L tax credit if they meet energy efficiency requirements. For multifamily housing, the credit typically applies to 3 stories or fewer, unless built to Zero Energy Ready Home (ZERH) standards, which can extend eligibility to larger buildings.

This makes 45L especially valuable for residential developers nationwide—from infill projects in urban areas to larger communities in states like Texas or North Carolina. The key is ensuring each unit meets the certification standards for ENERGY STAR or ZERH in your climate zone.

What are the ENERGY STAR and Zero Energy Ready Home requirements?

To qualify for 45L, homes must be certified under either the ENERGY STAR Residential New Construction Program or the Zero Energy Ready Home (ZERH) Program, depending on when construction occurs and the story count of the building.

ENERGY STAR is typically used for single-family homes and low-rise multifamily (3 stories or fewer) and requires tight envelope construction, efficient HVAC, and ventilation standards.

ZERH builds on ENERGY STAR and includes additional measures like ductless HVAC, solar-ready features, and advanced insulation, allowing the credit to apply to mid- and high-rise multifamily projects.

These programs are administered nationally, but certification requirements can vary slightly based on U.S. climate zones, so working with an experienced energy rater is essential.

Can TaxTaker help me claim the 45L tax credit?

Yes — TaxTaker helps builders, developers, and property owners across the U.S. claim the 45L tax credit, which offers up to $5,000 per qualifying residential unit. Our team handles the entire process, from coordinating with certified energy raters to managing all documentation and helping your CPA file IRS Form 8908.

Whether you're building ENERGY STAR-certified townhomes, Zero Energy Ready apartments, or affordable housing projects, we ensure your units meet the technical criteria and your team captures the full value of the credit. We've worked with projects nationwide — from multifamily builds in Texas to urban infill housing in the Northeast — and our success-based pricing means you only pay if you receive the credit.

If you're not sure whether your project qualifies, we offer free estimates and pre-reviews to help you make an informed decision.