Residential Clean Energy and Energy Efficient Home Improvement Credits
Expiring 12/31/2025
Are you planning to install a new water heater, biomass stove, windows, doors, or insulation in your home? Thinking about installing clean energy systems such as solar panels, wind turbines, or battery storage systems?
If so, the time to act is now. The “One Big Beautiful” act significantly shortened timelines for a number of federal energy credits available to taxpayers. Residential tax credits for home energy efficiency or solar improvements are expiring December 31, 2025.
What do these credits include?
Residential Clean Energy Credit
This is a 30% tax credit for the cost of installing clean energy systems such as:
- Solar panels;
- Solar water heaters;
- Geothermal heat pumps;
- Small wind turbines;
- Battery storage systems (3+ kWh capacity).
Residential clean energy credits are non-refundable, so you cannot get back more on the credit than you owe in taxes. Unlike home improvement credits, unused clean energy credits are allowed to carry forward to reduce your tax liability in future years. This carry forward is not affected by the expiration of the credit.
Energy efficient Home Improvement Credit
Provides 30% of the cost for qualifying upgrades, up to an annual maximum of $3200. Specific items have lower credit caps:
- $2000 – Qualifying heat pumps, heat pump water heaters, biomass stoves;
- $1200 – General improvements – insulation, air sealing, electrical panel upgrades;
- $600 – Exterior windows and skylights;
- $500 – Exterior doors ($250/door up to a two door maximum of $500);
- $150 – Home energy audit.
Residential energy credits are non-refundable, so you cannot get back more on the credit than you owe in taxes. These credits do not carry forward to subsequent years. If you are uncertain whether you would benefit from the energy efficiency credit, we are here to help you figure it all out.
Act now on home project plans to claim energy efficient home improvement credits for your primary residence.
Qualifying home improvements and residential clean energy installations must be completed by December 31, 2025.