The information in this article is up to date through tax year 2025 (tax returns filed in 2026).
There are several reasons to make your home more energy-efficient. You can reduce your carbon footprint, save on utilities, and qualify for a tax incentive, including the Residential Clean Energy Credit and Energy Efficient Home Improvement Credit. However, under the One Big Beautiful Bill (OBBB), many of these credits are now set to expire on December 31, 2025. If you make qualifying home improvements before the end of 2025, you can still claim the credits when you file your 2025 tax return in 2026. Keep reading to learn how you can get a tax credit for energy-efficient home improvements.
Can I claim energy-efficient tax credits in 2025?
The One Big Beautiful Bill Act (OBBB) significantly impacts energy tax credits by ending many of them sooner than expected. Most will now expire at the end of 2025 instead of 2032. This means homeowners must complete qualifying improvements by December 31, 2025 to claim these credits.
How to claim the Residential Clean Energy Credit
The new Residential Clean Energy Credit (formerly known as the Residential Energy Efficient Property Credit) applies to new installations and upgrades to renewable energy systems (in both new builds and existing homes). The following energy-efficient installations qualify for the credit:
- Qualifying solar electric systems
- Solar water heating systems
- Small wind energy systems
- Geothermal heat pumps
- Qualifying fuel cells
- Battery storage technology
The Residential Clean Energy Credit is worth up to $1,200 annually (or 30% of the costs of eligible home improvements) for qualifying home improvements completed on your primary residence only. The credit is nonrefundable and will expire at the end of 2025. There is no AGI limitation on this credit and the amount of the credit is not capped, except on fuel cells which is limited to $500 for each half kilowatt of capacity of the property.
If you made energy-saving improvements to your primary home during the tax year, you could qualify for the residential renewable energy tax credit. The system can be installed on a new build or an existing home. Renewable energy systems that qualify for the credit include:
- solar electric systems (solar panels)
- solar water heaters (not used for swimming pools or hot tubs)
- geothermal heat pumps
- small wind turbines
- fuel cells
Some examples of expenses that do not qualify for the Energy Efficient Home Improvement credit include:
- Used or previously owned equipment
- Traditional roofing materials
How to claim the Energy Efficient Home Improvement Credit
There is another new credit for energy-efficient home upgrades called the Energy Efficient Home Improvement Credit (formerly known as the Nonbusiness Energy Property Credit). This credit is equal to 30% of the total amount paid for qualified energy-efficiency property improvements (up to $1,200 per year). There are limits on how much you can claim on your primary residence depending on the following types of improvements:
- $600 for any single energy-efficient appliance such as advanced main air circulating fans, central air conditioning, hot water heaters, furnaces, electric heat pump water heaters fueled by gas, propane, or oil, insulation materials, or metal or asphalt heating.
- $600 for windows and skylights
- $500 for exterior doors ($250 per door)
- $150 for energy audits
You can also claim up to $2,000 for heat pumps, air source heat pumps, biomass stoves, and furnaces. If you have both types of energy-efficient-related expenses, you can claim up to $3,200 per year on qualifying home improvements.
Some examples of expenses that do not qualify for the Energy Efficient Home Improvement credit include:
- Used or previously installed equipment
- New construction: This credit is only for existing homes – not for newly built homes.
- Labor costs for certain items: Labor for installing envelope components like insulations, windows, and doors does not qualify.
- Items that don’t meet ENERGY STAR or IECC standards
You are eligible to claim the Energy Efficient Home Improvement Credit if you are making qualifying home improvements on your primary residence, not installations on a new build. This credit is nonrefundable and will expire at the end of 2025.
How much can I claim for renewable energy improvements?
Under the new Residential Clean Energy Credit, you could receive a tax credit worth up to 30% (or $1,200 per year) of the cost of eligible energy-efficient home upgrades for your primary residence purchased by December 31, 2025.
How to fill out Form 5695
You can claim the Residential Clean Energy Credit and the Energy Efficient Home Improvement Credit using IRS Form 5695. To fill out this form, you’ll need to gather documentation of the energy-efficient improvements, such as receipts, manufacturer certifications, and installation dates.
What appliances qualify for energy tax credits?
While appliances like dishwashers and refrigerators can reduce your energy and save you money on utilities, there is no tax credit for these kinds of in-home purchases. The credit applies to alternative energy equipment such as solar panels and geothermal heat pumps. See above for the complete list of systems that do qualify.
Can I claim a tax credit for my energy-efficient vehicle?
There is a tax credit for certain qualifying electric vehicles. The Clean Vehicle Tax Credit is worth up to $7,500 in non-refundable credit for new vehicles, or $4,000 for used vehicles. This credit will be expiring on September 30, 2025.
For more information on the standards used to qualify products as “energy-efficient,” visit wws.irs.gov or www.energystar.gov.
