You're watching your energy bills climb, knowing your windows are a big part of the problem. You've heard that energy-efficient shades[^1] can help, but the upfront cost is high, and trying to understand tax credits feels like a full-time job.
You can get a significant amount of that money back. The U.S. government offers a 30% federal tax credit[^2] for qualifying energy-efficient shades, up to $1,200 each year. On top of that, local utility companies[^3] often provide direct cash rebates[^4] for the same products.
This is a topic I cover almost daily with project buyers like Emma. She needs to deliver energy-efficient solutions[^5] for her clients, but more importantly, she needs to prove the return on investment[^6]. These incentives are the key to making the numbers work. The process is more straightforward than you think, but you have to know the rules. Let's break down exactly how you can get this money back.
What incentives are available for energy-efficient window shades?
You know there are government programs for going green, but you're not sure which ones apply to window treatments. The information seems scattered across different websites, making it hard to get a clear picture.
The main incentives available are the 25C federal tax credit[^7], various state-level tax credits[^8], and cash rebates[^4] from local utility companies[^3]. The best part is that you can often "stack" these programs, combining a federal credit with a cash rebate for the exact same purchase.
The incentive landscape can feel complex, so I always advise clients to look at it in three layers.
- Federal Level: The biggest and most widely available incentive is the Energy-Efficient Home Improvement Credit, also known as 25C. This credit was extended through 2032 and allows you to claim 30% of the cost of qualifying products, with a cap of $1,200 per year. This is a powerful tool for reducing the initial project cost.
- State Level: Many states offer their own separate incentives for energy-efficient home upgrades[^9]. These can be additional credits or deductions. These programs vary widely, so you'll need to check your specific state's department of revenue website or a database like DSIRE to see what's available.
- Local Level: This is where you can get direct cash back. Many local power companies offer rebates for installing energy-saving products[^10]. For example, Xcel Energy in Colorado offers $1.33 per square foot for AERC-rated cellular shades[^11], and Austin Energy in Texas provides $1.00 per square foot. Stacking these on top of the federal credit can sometimes offset 35-50% of the total cost.
Do window shades qualify for the 25C Federal Tax Credit?
You've heard about the big federal tax credit, but the rules seem to focus on things like windows and insulation. You're worried that window shades, which are technically attachments, might not be included.
Yes, certain types of window shades absolutely qualify for the 25C tax credit. However, not just any shade will do. To be eligible, the product must have a certified energy-performance rating[^12] from an approved body. Honeycomb shades are the most common product to meet this high standard.
The reason honeycomb shades[^13], also called cellular shades, qualify is because they are engineered specifically for insulation. It’s all about their unique structure. The fabric is formed into honeycomb-shaped cells that trap air, creating a thermal barrier[^14] between the window glass and your room. This design is incredibly effective. A good double-cell shade can cut solar heat gain[^15] in the summer by up to 60% and reduce heat loss through the window in winter by 40%. This can lead to savings of up to 15% on cooling costs alone.
To be officially eligible for the credit, a shade must either be listed in the ENERGY STAR "Most Efficient" category or have an energy-performance rating from the Attachments Energy Rating Council (AERC). This certification is the "entry ticket" that guarantees the product performs as advertised. Many of the honeycomb shades we work with at VelaBlinds carry this certification.
Are honeycomb shades tax-deductible?
You've identified honeycomb shades as the best product for your project. Now you need to be certain: if you purchase them, can you actually deduct the cost or claim a credit on your taxes?
Yes, qualifying honeycomb shades are eligible for a tax credit, not a deduction. You can claim the 25C Energy-Efficient Home Improvement Credit, which is 30% of the product cost, up to a maximum of $1,200 per year.
This is an important distinction that I clarify for my clients. A tax deduction reduces your taxable income, while a tax credit directly reduces the amount of tax you owe, dollar for dollar. A credit is much more valuable.
For a product to be eligible, the key is the certified performance we just discussed. [10] You can't just buy any cellular shade off the shelf. You need to ensure it's a specific product that the manufacturer has certified as meeting the IRS requirements. For instance, the well-known Hunter Douglas Duette® honeycomb shades have been officially listed by the company as eligible products, which sets a clear precedent for the industry. When you work with a supplier like me, I ensure that the product specifications meet these requirements and provide the necessary documentation to prove it.
How much can I save with the energy tax credit for shades?
You see the "30% back" headline, but you want to understand the real-world numbers. What is the actual cash value you can expect to get back on a typical project budget?
You can save up to a maximum of $1,200 per year from this federal credit. It covers 30% of the purchase price of the shades themselves, not including labor or installation costs.
Let's walk through a few simple examples to make it clear.
- If you spend $2,000 on qualifying honeycomb shades, the credit is 30% of that, which equals $600.
- If you spend $4,000 on shades, the credit would be 30% of that, which equals $1,200. This is the maximum you can claim for this category.
- If you spend $6,000 on shades, you will still only get the $1,200 credit because it is capped at that amount annually.
The great thing is that this is an annual cap. If you have a large project, you could potentially stage it over two years to claim the $1,200 credit twice. Furthermore, the return on investment[^6] doesn't stop with the tax credit. By pairing these shades with smart automation[^16]—using timers or sensors to close them during peak heat—you can boost your energy savings by another 10-15%. This drastically shortens the payback period of your investment.
How do I claim the tax credit for qualifying window coverings?
The idea of navigating IRS forms is intimidating. You're worried you'll miss a crucial step and have your claim denied, making the whole effort a waste of time and money.
Claiming the credit is a straightforward process that comes down to good record-keeping. You need to hang on to your sales invoice and the Manufacturer's Certification Statement[^17], then use that information to fill out IRS Form 5695[^18] when you file your taxes.
Let's break down the three pieces of paper you need.
- Your Sales Invoice: Keep the final, paid invoice from your purchase. It needs to clearly state what product you bought and the date of purchase. It's simple, but it's your primary proof of purchase.
- The Manufacturer's Certification Statement: This is the most important document. It's a signed statement from the product manufacturer attesting that the specific shade model you bought is eligible for the tax credit. You don’t need to mail this to the IRS, but you must keep it in your tax records in case you are ever asked for it. We provide this certificate for all qualifying products we sell at VelaBlinds.
- IRS Form 5695, Residential Energy Credits: This is the actual form you'll file with your tax return. You (or your accountant) will use the information from your invoice to fill out the relevant sections for "Energy-Efficient Home Improvements."
While the process is simple, I always recommend consulting with a tax professional to ensure everything is filed correctly based on your personal financial situation.
Which window shades are eligible for utility rebates[^19]?
You're excited about the federal tax credit, but you've heard rumors about getting even more money back directly from your local power company. How do you find out if your project qualifies?
Many local utility companies offer cash-back rebates for installing specific energy-saving shades. Unlike the federal tax credit, eligibility for these rebates is almost always tied to a product having an AERC energy-performance rating.
The AERC (Attachments Energy Rating Council) is a third-party organization that tests and certifies the energy performance of window attachments like blinds and shades. Think of it like the miles-per-gallon sticker on a car; it gives a reliable, unbiased rating of how well the product will block heat in the summer and retain warmth in the winter.
Utility companies rely on these AERC ratings to ensure they are only incentivizing products that deliver real energy savings. This is why you see programs like the one from Xcel Energy, which pays $1.33 per square foot for cellular shades that have a qualifying AERC rating. The process usually involves filling out an application on your utility company's website after the shades have been installed. You'll typically need to provide a copy of your invoice and the product's AERC certificate. The best way to start is to visit your power company's website and search for "window treatment rebates[^20]" or "shade rebates."
Conclusion
Don't just buy new shades; make a smart investment in your home's efficiency. With a combination of federal tax credits, state incentives, and local utility rebates, you can significantly cut the upfront cost of proven energy-saving shades like honeycomb blinds.
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[^1]: Explore how energy-efficient shades can significantly reduce your energy bills and improve home comfort.
[^2]: Learn about the federal tax credit that can help you save money on energy-efficient home improvements.
[^3]: Learn how local utility companies can offer cash back for installing energy-efficient products.
[^4]: Discover local cash rebates that can further reduce the cost of your energy-efficient window treatments.
[^5]: Explore various energy-efficient solutions that can help lower your energy bills and improve comfort.
[^6]: Understand the financial benefits of investing in energy-efficient window treatments for your home.
[^7]: Understand the specifics of the 25C tax credit and how it can benefit your home renovation projects.
[^8]: Find out about additional state incentives that can complement federal tax credits for energy efficiency.
[^9]: Discover various energy-efficient upgrades that can enhance your home's performance and value.
[^10]: Find out which energy-saving products can help you save money through rebates and credits.
[^11]: Discover how AERC ratings ensure that your shades meet energy efficiency standards for rebates.
[^12]: Understand the significance of energy-performance ratings in selecting energy-efficient products.
[^13]: Explore the benefits of honeycomb shades and their effectiveness in improving home insulation.
[^14]: Explore how honeycomb shades create a thermal barrier to enhance energy efficiency in your home.
[^15]: Learn how honeycomb shades can effectively minimize solar heat gain, improving indoor comfort.
[^16]: Explore how integrating smart automation with window shades can maximize your energy savings.
[^17]: Learn about the importance of the Manufacturer's Certification Statement in claiming tax credits.
[^18]: Get guidance on completing IRS Form 5695 to claim your energy-efficient home improvement credits.
[^19]: Find out how utility rebates can further reduce the cost of your energy-efficient window coverings.
[^20]: Learn how to access window treatment rebates from your local utility company to save on costs.Partner with VelaBlinds for Your Next Project
Smart window treatments shouldn't be complicated. After working with 500+ distributors and contractors worldwide, I've streamlined the process to get you quality products, competitive pricing, and reliable support - every time.
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Paul Chen, Founder
"I built VelaBlinds to solve the real challenges I faced as a project buyer - long lead times, unclear specs, and unreliable suppliers. Let's discuss how we can power your projects with smarter blinds."
Serving distributors and contractors across North America, Europe, and Australia since 2018.
