The One Big Beautiful Bill changed the expiration date for the Residential Clean Energy Credit and the Energy Efficient Home Improvement Credit to December 31, 2025. Originally designed to expire in 2032, these credits can lead to substantial tax savings for taxpayers. These home energy tax credits were removed as a cost savings measure.
Clean vehicle credits are ending on 9/30/2025.
Residential Clean Energy Credit Ends 12/31/2025
To meet the requirements, you must install one of the following items in your main home or second home. Homes you rent out do not qualify, but renters who improve the property do qualify. The credit is 30% of the expenditure, including labor. The item must be brand new; used items do not count.
Specific Categories
- Geothermal Heat Pumps
- Wind Turbines
- Solar Electric Panels
- Solar Water Heaters
- Fuel Cells (credit limited by the amount of kilowatt hours and only for main homes)
- Battery Storage Systems (with equal to or greater than three kilowatt hours)
You can claim all of these in the same year if you qualify for them. There are no limits on the amount of credit you can claim, except for Fuel Cells as noted above.
Energy Efficient Home Improvement Credit Ends 12/31/2025
To qualify, you need to install or have installed one or more of the following items in a house that you live in that already exists. New homes do not qualify, nor do rental houses. The amount of the credit is 30% of the expense, with maximum limits listed below.
Specific Categories
- Exterior Doors (up to $250 per door, $500 total; must be main home; cannot include labor costs; for homeowners only—not renters)
- Certified Home Energy Audit (up to $150; must be main home; for homeowners only—not renters)
- Exterior Windows and Skylights (up to $600; must be main home; cannot include labor costs; for homeowners only—not renters)
- Insulation and Air Sealing Materials (up to $1,200; must be main home; cannot include labor costs; for homeowners only—not renters)
- Central Air Conditioners (up to $600; can be main or second home; you can include labor costs; homeowners or renters can claim)
- Natural Gas, Propane, or Oil Water Heaters (up to $600; can be main or second home; you can include labor costs; homeowners or renters can claim)
- Natural Gas, Propane, or Oil Furnaces and Hot Water Boilers (up to $600; can be main or second home; you can include labor costs; homeowners or renters can claim)
- Electric Panel Upgrade (up to $600; can be main or second home; you can include labor costs; homeowners or renters can claim)
- ____________________________________________________
- Electric or Natural Gas Heat Pumps (up to $2,000; can be main or second home; you can include labor costs; homeowners or renters can claim)
- Electric or Natural Gas Heat Pump Water Heaters (up to $2,000; can be main or second home; you can include labor costs; homeowners or renters can claim)
- Biomass Stoves and Boilers (up to $2,000; can be main or second home; you can include labor costs; homeowners or renters can claim)
Maximum Credits
The maximum credit per year is $3,200. You can claim up to $1,200 for anything above the line and $2,000 for anything below the line. Also, new for 2025, it must be from a qualified manufacturer with a PIN or QM Code. (Insulation and Air Sealing Materials are exempt from needing a PIN.)
What Qualifies Is Complicated
The tax credits can provide substantial savings for you at tax time. You can claim both credits on the same tax return, and they do not affect each other’s limits. All items for either credit must meet specific standards—just calling themselves energy efficient is not sufficient. Installation of the improvement needs to occur on or before December 31, 2025—simply ordering it or prepaying for it does not count.
Takeaway
A large number of popular federal tax credits homeowners are accustomed to taking advantage of are ending on 12/31/2025. Taxpayers can still qualify for these credits; however, time is running out. Meet with a tax professional now to plan improvements before the December 31st, 2025 deadline.