Act Fast: Energy Tax Credits Are Ending

⏰ Tick-Tock! Last Chance to Score Big on Energy Savings

The "One Big Beautiful Bill Act" (OBBBA), signed into law in July 2025, introduces significant changes to federal tax credits for energy-efficient home improvements. Previously extended through 2032, many of these credits will now expire earlier than anticipated. Homeowners planning upgrades should be aware of these changes to maximize their savings.

🔧 Section 70505: Termination of the Energy Efficient Home Improvement Credit

Under Section 70505 of the OBBBA, the Energy Efficient Home Improvement Credit (Section 25C) will no longer apply to property placed in service after December 31, 2025. This credit currently offers up to $3,200 annually for qualifying home improvements, including:

• Up to $1,200 for insulation, exterior doors, windows, and skylights.

• Up to $2,000 for heat pumps, water heaters, and other energy-efficient upgrades.

To benefit from this credit, homeowners must complete installations by December 31, 2025, and file IRS Form 5695 with their tax return. Failure to do so will result in the loss of these tax savings.

☀️ Section 25D: Residential Clean Energy Credit

The Residential Clean Energy Credit, which provides a 30% tax credit for renewable energy systems like solar panels, small wind turbines, geothermal heat pumps, and battery storage, will expire for expenditures made after December 31, 2025. This change accelerates the original phase-out schedule set by the Inflation Reduction Act.

🚗 Electric Vehicle (EV) and Charging Station Credits

Several EV-related tax credits are also affected:

• Section 30D (Clean Vehicle Credit): Expires for vehicles acquired after September 30, 2025.

• Section 25E (Previously-Owned Clean Vehicles Credit): Expires for vehicles acquired after September 30, 2025.

• Section 30C (Alternative Fuel Vehicle Refueling Property Credit): Expires for property placed in service after June 30, 2026.

Homeowners considering electric vehicles or the installation of EV charging stations should act promptly to take advantage of these credits.

🏠 Section 45L: New Energy Efficient Home Credit

This credit, available to builders of energy-efficient homes, will terminate for homes acquired after June 30, 2026. To qualify, homes must meet specific energy efficiency standards, such as Energy Star or Zero Energy Ready Home certifications.

🗓️ Key Dates to Remember

🛠️ How to Act Before It's Too Late

• Plan and Schedule: Ensure that any installations or purchases are completed before the respective deadlines.

• Consult Professionals: Work with certified contractors and tax professionals to ensure compliance and maximize credit eligibility.

• Keep Documentation: Maintain receipts, warranties, and other relevant documents to substantiate your claims.

• File Promptly: Submit IRS Form 5695 with your tax return to claim the credits.