Tax-Friendly Backyard Ideas on a Budget for Summer 2025

19 5 minutes read

Ever dream of having the “perfect” backyard space? You’re not alone. According to a recent survey by data collection firm Talker Research, more than 40% of American homeowners plan to create a “backyard sanctuary” in 2025.*

However, the estimated average cost of completing their “dream exteriors” was $13,321. While substantial, this amount typically can’t buy you something lavish, like an inground pool, which may cost around $30,000 to $60,000.

So, how can you make your dream backyard a reality and stretch your dollar further? Well, one solution may come from a seemingly unlikely source: Federal taxes.

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Using an estimated budget of $13,321, Kiplinger compiled a list of projects that may fit your summer backyard while allowing certain tax benefits that could make these ideas more affordable. Here they are.

*The survey was commissioned by Trex and administered online to 2,000 American homeowners.

Backyard ideas for summer

Kiplinger used sample home projects from key federal tax laws to create the list of summer backyard ideas. Estimated costs were sourced through HomeGuide’s estimator tool in June 2025.

Yet it’s important to note that current material prices, tariff impacts, scope of work, and other factors can impact the cost of a home project. Consequently, price estimates are ever-changing. Consult with your contractor first before deciding whether a project is right for you and your budget.

*Note: The tax policy mentioned in this article pertains to federal taxes only. Check your state’s Department of Revenue website to see if you might be eligible for a state-level tax break.

Backyard renovation ideas: 2025

Estimated cost: $500 to $12,600

Thanks to the Inflation Reduction Act (IRA), the IRS offers a slew of federal tax incentives for energy efficiency in your outdoor area. These energy-efficient projects are just one way you can renovate your backyard this summer on a budget. For example:

Your backyard door may qualify for a tax credit of up to $250. (The average exterior door costs between $500 and $1,900.)
Central air conditioners, typically installed in the back or side yards, may qualify for up to $600 off the installation costs. (A new central HVAC system generally costs a minimum of $7,000.)
Solar panels can qualify for up to 30% off the installation costs. (Solar panels are generally priced at least $12,600 after the tax credit.)

These project ideas may not only save you on taxes, but also liven up your home’s summer landscape and cut your monthly energy bill.

However, if you’re planning to take advantage of tax credits for energy-efficient home improvements, you might want to call your contractor soon.

The GOP’s latest proposal, called the “One Big Beautiful Bill Act,” includes a slew of tax provisions that could cut many “clean energy” tax incentives, including those for energy-efficient home improvements. This is why some homeowners are rushing to install solar panels before Trump cuts tax credits.

But for now, none of the above tax breaks are gone. So if you start planning your project in the summer, you could finish before any potential changes to federal tax policy are made.

Summer 2025 may be the perfect time to spruce up your backyard with home projects like new fencing, patios, or decks.

(Image credit: Getty Images)

Backyard ideas to increase home value

Estimated cost: $2,000 to $12,000

If you’re looking to sell your home in the future, you might be wondering what backyard summer projects could add the most “value” to your property.

Well, here are a few value-added backyard ideas to get you started:

Installing a snazzy new patio or deck, which may cost between $2,000 and $10,000, assuming 10-foot by 20-foot dimensions.
Adding a fence for Fido or to make backyard barbecues more private. The average cost of fencing your yard can be $4,000 to $12,000, assuming a 200-foot straight fence.

Although these so-called “capital improvements” can be a bit pricier than other projects on this list, they can add value to your home, thus increasing your home’s tax basis. This could, in turn, affect your capital gains tax on the sale of your home.

For example:

If you purchased a home for $200,000 and later sold the house for $500,000, part of your $300,000 difference could be subject to capital gains tax.
But if you can prove $50,000 of home upgrades, your home’s tax basis would be $250,000. The difference between the selling price of $500,000 and the new tax basis of $250,000 is less than before and may not be taxed.
This capital gains exclusion could prevent you from paying capital gains taxes on your home sale, while simultaneously leading to a higher selling price for your house (giving you more money).

However, you may want to look out for property taxes, which might increase as your home’s value rises. While this wouldn’t affect short-term move-out dates, it might affect you if you live in your home for longer than a year.

In particular, studies have shown that 75% of adults over age 50 want to age in place. But if you do live with someone who needs a medically necessary home improvement, you might qualify for the medical expense tax deduction on your federal return.

For more information, check out Kiplinger’s report, Tax-Deductible Home Improvements for Retirement in 2025.

Backyard projects on a budget

Estimated cost: $1,000 to $6,900

If you’re a business owner, these backyard ideas may be perfect for you. The IRS allows a home office tax deduction for qualified business expenses incurred to set up or maintain a business. This includes independent contracting, freelancing, and other self-employed work.

So if you use your backyard for a business purpose, the following projects may qualify for a federal tax deduction:

Permanent storage sheds used to store business equipment and materials. A shed costs, on average, at least $1,000 (assuming 10 feet by 10 feet dimensions).
Pathway or driveway improvements may be partially tax-deductible (if they are used for business purposes, like when your clients visit your office). The cost of a new concrete 2-car driveway can be around $1,700 to $6,900.

But before you claim a business expense or home office tax deduction, be sure you meet the strict guidelines.

For instance, home office deductions typically require that you use the area regularly and exclusively for business, while most business expense deductions need you to prove the expense is for the “ordinary and necessary” operations of your business.

There are other requirements you must meet, including careful documentation of the improvements, so make sure you can claim the deduction before filing your federal return. To that effect, you may want to consult with your qualified tax professional before breaking ground on your new project.

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