If you are a homeowner in Illinois and are thinking of investing in big-ticket home upgrades like a new roof, windows, siding, or doors, it’s natural to wonder: Can I Get a Home Improvement Tax Credit in Illinois?
The answer, like taxes themselves, isn’t always straightforward. Rules change every year, so it is always a good idea to take a fresh look at what’s available for home improvement tax credits. Also, of course, we all pay two types of taxes: federal and state. So, it’s important to look at both and determine where the savings may lie in each.
Let’s look at what the State of Illinois offers first.
Does Illinois Offer Home Improvement Tax Credits?
For 2025, unfortunately, the short answer here is no. Illinois does not offer a state income tax credit for residential energy-efficiency home improvements.
However, if you are thinking about solar roofing, the Illinois Shines program offers incentives for solar projects through the purchase of Renewable Energy Credits (RECs). Current prices range from $55 to $180/MWh. Illinois Shines helps homeowners lower the cost of solar panels by paying them for the clean energy their system produces, essentially turning solar power into a second source of savings. We install solar roofing at Pro-Home Services, so don’t hesitate to reach out with questions.
However, even though you may not be able to get a home improvement tax credit in Illinois, homeowners in the Land of Lincoln are eligible for cash rebates through their electric or gas utility. These are not tax credits, but they do reduce out-of-pocket costs.
Rebates may apply to:
- ENERGY STAR windows & doors
- Insulation and air sealing
- High-efficiency furnaces, boilers, heat pumps
- Smart thermostats
Qualifications vary, but in most cases, equipment must be new and installed by a certified contractor. Some utilities with active programs include Nicor Gas, ComEd, and People’s Gas, or consult your local utility company.
What Federal Home Improvement Tax Credits are Available?
Homeowners can still claim a home improvement tax credit on qualified energy-efficient home improvements made through 2025. Qualifying home improvement expenses must improve the quality of the home and be new, not used materials. The maximum tax credit you can claim for energy-efficient home improvements is 30 percent of the cost or up to $1,200 total. Such qualifying improvements include:
Exterior doors. Qualifying doors must meet applicable Energy Star requirements. Credit is limited to $250 per door and $500 total. Many Provia doors, offered through Pro-Home Services, are Energy Star-certified. The following types of doors do not qualify:
- Interior doors
- Storm doors (most cases)
- Non-ENERGY STAR products
- Installation labor (credit applies to product cost only)
Exterior windows and skylights. Again, all products must meet Energy Star Most Efficient certification requirements. Credit is limited to $600 total. These include many models of Anderson and Alside replacement windows sold by Pro-Home Services. Windows must meet federal qualifications for the tax credit, which include:
- Have an ENERGY STAR label
- Double-paned (single panes usually don’t have enough insulation to qualify)
- Exterior windows only, not decorative or room-dividing windows
- Installed in spaces that count as your principal residence
Insulation & Air Sealing. All products must meet International Energy Conservation Code (IECC) standards, but include traditional bulk insulation products as well as weather stripping, spray foam, caulk, house wrap, etc., as long as they are qualified. The tax credit contributes to the $1,200 maximum energy-efficient home improvement tax credit.
Central AC/Furnaces. The credit is 30 percent of the project cost ,up to $600, for central air conditioners, furnaces, and contributes towards the $1,200 maximum home improvement credit.
It’s also worth noting that for 2025, you must report the Qualified Manufacturer Identification Number (QMID) for the item on your tax return.
Roofing and Your Cost Basis in Illinois
Even when a home improvement doesn’t qualify for a current tax deduction or credit, it can still deliver real tax savings later through something called your home’s cost basis.
Your cost basis is essentially what the IRS says you have invested in your home. It starts with the purchase price and increases when you make qualifying capital improvements.
Homeowners often think of home improvements and capital improvements as interchangeable terms, but they are different. A home improvement can be a capital improvement, but not all capital improvements are home improvements. A capital improvement markedly adds value or extends the roof of your house. These are such updates as:
- A new roof
- Replacement windows or exterior doors
- New siding
- Structural or system upgrades
These are not considered routine maintenance. Because of that, the IRS allows you to add their cost to your home’s basis, or value of your home for tax purposes.
Why is that important? Because in Illinois, capital gains are taxed as ordinary income. That means when you sell your home, any taxable gain is subject to Illinois income tax instead of a special lower rate.
In other words, the higher the value of your house, the lower your taxable gain upon sale, or:
Higher basis = lower taxable gain
And the good news there is:
Lower taxable gain = less state and federal tax
The lower your taxable gain, the less tax you will owe to both Illinois and the federal government. So, although getting new roofing, siding, windows, and doors may not qualify you for a home improvement tax credit, it increases your home’s value, which eventually helps you reduce your taxes!
Tax Credits on Home Improvements Require Receipts
Remember that if you make either a home improvement or a capital improvement during the year, whether or not you plan to submit it for a home improvement tax credit, keep documentation for your tax preparer. Retain contracts, invoices, proof of payment, and product details. At any time, you may be asked to prove that the product you use meets Energy Star and other qualifications for a tax credit. The best way to protect your investment (and home improvement tax credit!) is to hold onto these documents.
We hope this information has been helpful for this year’s tax season and will help you maximize the financial benefit of your home improvement. If you’re thinking that a home improvement this year will help with next year’s taxes, and you’re looking for a dependable, experienced, honest contractor to help you replace your roofing, siding, windows, and doors, we hope you’ll reach out to us for a free estimate or call 630-790-0800.