07/30/2025
IMPORTANT CHANGES for 2025 to ENERGY CREDITS AND CLEAN VEHICLE CREDITS. VISIT IRS.GOV FOR UPDATES FROM THE NEW TAX BILL.
Many popular energy tax credits are ending or undergoing changes in 2025 due to the OBBBA. It is crucial to complete installations and purchases by the respective deadlines to claim the credits. It's important to note that the One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, made some significant changes, including the early termination of some previously extended credits.
Here's a breakdown of key credits:
1. Energy Efficient Home Improvement Credit (Section 25C)
Expiration: December 31, 2025, according to NerdWallet and TurboTax.
Credit Amount:
30% of costs, up to $1,200 annually, for most improvements like windows, doors, insulation, and air sealing.
A separate annual limit of $2,000 for specific property like heat pumps, water heaters, and biomass stoves/boilers.
Maximum annual credit is $3,200.
Key Features: No lifetime dollar limit, but an annual limit applies. Starting in 2025, a credit will only be allowed for items produced by a qualified manufacturer, and the taxpayer must include the product's identification number (PIN) on their tax return.
Note: You can claim this credit annually until the program ends.
2. Residential Clean Energy Credit (Section 25D)
Purpose: Provides a tax credit for installing qualifying renewable energy systems in homes.
Expiration: December 31, 2025, due to the OBBBA.
Credit Amount: 30% of the cost of new, qualified clean energy property (solar panels, wind turbines, geothermal heat pumps, fuel cells, and battery storage).
Key Features: No annual or lifetime dollar limit (except for fuel cells). Unused credits can be carried forward. Applies to both primary and secondary residences (but not rental properties). The credit for fuel-cell equipment is limited. According to NerdWallet, the average solar installation can save around $7,500.
Note: You must own your solar energy system to be eligible for the 30% tax credit. Leased systems or those under a Power Purchase Agreement (PPA) are not eligible.
3. Electric Vehicle (EV) Tax Credit
Purpose: Incentivizes the purchase of eligible new and used electric vehicles.
Expiration: September 30, 2025, for both new and used vehicles.
Credit Amount:
Up to $7,500 for new EVs.
Up to $4,000 for used EVs.
Key Features: Eligibility requires meeting certain criteria, including MSRP caps, critical mineral and battery component requirements, and adjusted gross income (AGI) limitations. You can claim the credit on your taxes or transfer it to an eligible dealer for an immediate discount.
Note: The credit is unavailable after September 30, 2025.
VISIT FUELECONOMY.GOV TO SEE WHAT QUALIFIES UP TO THIS DATE.
