Don’t Miss Out: Energy Tax Credits Ending December 31, 2025 Under the OBBBA!
The One Big Beautiful Bill Act (OBBBA) made big changes to two popular energy tax credits: the Energy Efficient Home Improvement Credit and the Residential Clean Energy Credit. Here’s what homeowners and tax filers need to know, explained simply:
Energy Efficient Home Improvement Credit
- What It Was: This credit let homeowners offset part of the cost of certain energy-saving improvements—like insulation, windows, doors, heat pumps, and home energy audits.
- What’s New: OBBBA ends this credit sooner than before. Now, you can only claim the credit for property placed in service (installed and ready to use) by December 31, 2025. After that, no new credits will be allowed for these improvements.
- Other Details: The law also required manufacturers to register with the IRS for their products to qualify, but because the credit is ending, ongoing reporting by manufacturers is no longer needed. However, products must still have a qualified product identification number to be eligible for the credit through 2025.
Residential Clean Energy Credit
- What It Was: This credit covered 30% of the cost for installing solar panels, solar water heaters, geothermal heat pumps, small wind turbines, fuel cells, and battery storage in your home.
- What’s New: OBBBA also ends this credit early. You can only claim the credit for expenditures made (meaning the system is installed and ready to use) by December 31, 2025. If installation finishes after that date, you can’t claim the credit—even if you paid for it earlier or signed a contract before the deadline.
- Special Rule for New Homes: If you’re building a new home, the credit is only available if you start using the home (and the clean energy system) by December 31, 2025.
Bottom Line:
If you want to claim either of these energy credits, make sure your improvements or installations are completed and in use by the end of 2025. After that, these tax breaks will no longer be available due to the OBBBA’s changes!