Refunds Smaller, Energy Credit Confusion
Many taxpayers are seeing smaller refunds this tax season and some homeowners report large energy upgrades aren’t qualifying for federal credits—issues range from withholding changes to income phaseouts and product eligibility. Tax pros are urging filers to double‑check IRS guidance and retain receipts and manufacturer certifications for big projects. (economictimes.indiatimes.com, ttlc.intuit.com)
The IRS reported an average federal refund of $3,676 and $160.829 billion in total refunds issued for the week ending March 6, 2026. (irs.gov) Publication 15‑T for 2026 was revised to reflect the One, Big, Beautiful Bill changes and the new withholding procedures employers must use, a shift that put more tax relief into paychecks and reduced the lump‑sum refunds some filers expected. (irs.gov) The White House had projected average refunds could rise by roughly $1,000, but IRS filing‑season snapshots show the actual year‑over‑year average increase was about $352 (10.6%) as of early March 2026. (whitehouse.gov) (irs.gov) The Energy Efficient Home Improvement Credit has specific annual limits — a $1,200 cap for many building‑envelope improvements with sublimits (for example, exterior windows and skylights are capped at $600) and a separate $2,000‑per‑year cap for qualified heat pumps and related equipment — and the credit is nonrefundable and only available for property placed in service through Dec. 31, 2025. (irs.gov 1) (irs.gov 2) For property placed in service in 2025 the IRS requires items be produced by a “qualified manufacturer” and reported with a four‑character Qualified Manufacturer Identification Number (QMID) or full Product Identification Number (PIN) on Form 5695, a documentation requirement that has led tax software and preparers to disallow credits when invoices lack those IDs. (irs.gov) (fixithomestead.com) Tax professionals have urged taxpayers to retain written manufacturer certifications, model numbers or PINs, and detailed invoices for each qualifying item because the IRS permits relying on a manufacturer’s written certification and requires the QMID/PIN be reported on the return for 2025 installations. (irs.gov 1) (irs.gov 2) The IRS updated its Tax Withholding Estimator to reflect OBBBA changes so taxpayers and payroll administrators can recalculate withholding and submit an updated Form W‑4 if they want to change take‑home pay versus potential refund size. (irs.gov) (irs.gov)
