Residential (Homeowner) Energy Credits — EXPIRING
Residential Clean Energy Credit (Section 25D)
Offers a 30% tax credit for the cost of qualified clean energy installations in a home (e.g., solar panels, wind turbines, geothermal heat pumps, fuel cells, and battery storage).
Important: The credit only applies if the property is installed and placed in service before December 31, 2025. After that date, taxpayers cannot claim this credit for 2026 and beyond.
Energy Efficient Home Improvement Credit (Section 25C)
Provides credits for energy-efficient upgrades such as ENERGY STAR windows, doors, insulation, and heat pump water heaters.
Eligible credits also generally apply only through December 31, 2025.
These residential credits are nonrefundable, meaning they can only reduce your tax liability to zero (they don’t generate a refund beyond your taxes owed). Excess credits may be carried forward.
Bottom Line for Homeowners
To benefit from these federal energy credits on your 2025 tax return (filed in 2026), the qualifying renewable energy or energy-efficient improvements must be installed and placed in service before December 31, 2025 — otherwise these incentives will not be available.
Business/Commercial Energy Credits
Clean Electricity Investment Tax Credit & Production Tax Credit (Sections 48E & 45Y)
These credits support the investment in or production of clean energy electricity (e.g., renewable generation) for qualifying facilities.
To qualify, facilities must meet certain emissions standards (e.g., net-zero or negative greenhouse gas emissions) and be placed in service after December 31, 2024.
These credits are part of broader incentives tied to the Inflation Reduction Act, but eligibility timelines, greenhouse gas tests, and phase-outs may vary.
Note: Certain business energy credits and incentives are being modified or phased out under recent tax legislation, so eligibility depends on project specifics and placement dates.
Key Deadlines to Keep in Mind (2025 Tax Year)
Install residential clean energy property by: December 31, 2025 to claim the 30% Residential Clean Energy Credit.
Complete energy-efficient improvements by: December 31, 2025 for qualifying home upgrade credits.
Business clean energy projects generally must be placed in service after 2024 under IRC Sections 45Y/48E rules to qualify for the corresponding credits.
Client Tip
If you’re planning solar, geothermal, battery storage, or other clean energy upgrades, the end of 2025 is a critical cutoff for federal tax incentives. Projects not completed and placed in service by that date will not qualify for these federal credits when you file your 2025 return in 2026.