If you’ve been thinking about making energy-efficient improvements to your home, now is the time to act! Several valuable federal tax credits created by the Inflation Reduction Act are now scheduled to expire on December 31, 2025, due to changes enacted through the One Big Beautiful Bill Act (OBBBA).
These credits, originally expected to run through 2032, now have a significantly shortened lifespan. This means that homeowners interested in claiming these benefits must complete projects by the end of 2025. Eligible homeowners can still access up to $3,200 in tax credits per year, but only if they act quickly. Don’t risk missing out due to scheduling delays or overbooked contractors!
What Home Energy Tax Credits Are Still Available?
As of mid-2025, there are four primary residential energy tax credits available to individuals and families. These incentives help offset the cost of making your home more energy-efficient and environmentally friendly.
1. Up to $1,200 Per Year for Main Home Energy Improvements
Homeowners can receive a credit equal to 30% of the cost, up to $1,200, for qualifying energy efficiency upgrades to their primary residence.
Eligible improvements include:
- Insulation (batts, rolls, spray foam, blown-in cellulose, and more.)
- Exterior doors (up to $250 per door, $500 total)
- Energy-efficient windows and skylights (up to $600 total)
- Certain electrical panel upgrades
The Fine Print
To qualify, materials must meet specific energy efficiency ratings established by the Department of Energy. Most labor costs are not eligible under this provision (with some exceptions, like for HVAC or solar installations).
Installation and service must be completed by December 31, 2025. Signing a contract or placing an order is not enough to claim the credit.
2. The 30% Consumer Solar Tax Credit (Section 25D)
This credit is claimed by homeowners who purchase (via cash or financing) a solar and or battery system. The tax credit is equal to 30% of the “total” installed cost of the solar expenditures. This credit ends on December 31, 2025.
The Fine Print
Like the main home energy improvement credit, materials must meet specific energy efficiency ratings, and labor costs may not eligible under this provision. Installation and service must be completed by December 31, 2025. Signing a contract or placing an order is not enough to claim the credit.
3. Up to $2,000 Per Year for High-Efficiency Heating and Cooling Systems
This credit is separate from the $1,200 annual limit and applies to both primary and second homes.
Homeowners can receive up to $2,000 per year for the purchase and installation of qualifying high-efficiency systems, such as:
- Heat pumps
- Heat pump water heaters
- Biomass stoves or boilers (such as pellet or wood-burning systems)
These systems typically offer substantial long-term utility savings and often qualify for state or utility rebates in addition to the federal credit.
- In Wisconsin, these energy improvements may also qualify for state incentives under the Focus on Energy or the Homes Act; contact your contractor to see what state rebates you’re eligible for.
The Fine Print
Again, the HVAC system must be installed and placed in service by December 31, 2025 to qualify.
4. $150 Credit for a Professional Home Energy Audit
A professional energy audit helps identify inefficiencies in your home and recommend upgrades. You can receive a 30% tax credit, up to $150, for a qualified audit performed by a certified professional. This is a great first step if you’re unsure which improvements will provide the most impact and may help you prioritize work that qualifies for the larger $1,200 credit given the new timeline.
The Fine Print
Audits must include a written report and meet standards outlined by the IRS.
2025 Is Your Last Chance to Claim These Credits
- Credits are non-refundable. They reduce your tax bill but won’t result in a refund if the credit exceeds your liability.
- Credits do not carry forward. If you don’t use the full credit in 2025, the unused portion is lost.
- Completion is required by December 31, 2025. To qualify, your improvements or system installation must be fully complete and operational by the end of the calendar year—not just scheduled or partially started.
Take Action ASAP!
If you are considering clean energy investments, it’s important to begin the process as soon as possible. Demand for contractors and equipment may rise as the deadline nears, and supply chain issues could cause delays. Acting early gives you the best chance of completing your project in time to reap the tax benefits.
These tax incentives can offer significant savings, but only if your project is completed by the December 31, 2025 deadline. At Wegner CPAs, our team of experienced tax advisors is here to guide you through every step of the process from helping you understand which upgrades qualify to what documentation you’ll need to claim each credit. Don’t miss out on these valuable opportunities! Reach out today to discuss strategies to maximizing your benefits before these credits expire.
