Did you spend money last year to weatherize your home or install heat pumps? How about solar panels or home batteries? If you made these or a number of other efficiency-minded home investments, there’s a good chance that you’re eligible for a credit this tax season. Part of the Inflation Reduction Act, these credits unfortunately expired at the end of 2025, years before they were originally set to end. But as long as your eligible improvements were completed and placed in service by December 31, you can get a break on your federal tax bill. Here’s a high-level how-to for these credits, with links for extra details.
How to claim your credit
- Collect your documentation for the improvement: receipts, invoices, and manufacturer certifications. Hold on to these in case ever needed by the IRS.
- Use IRS Form 5695
- For clean energy projects (e.g., solar, geothermal, wind, battery storage) use Part I of Form 5695
- For energy efficient upgrades (e.g., energy audits, windows, doors, insulation, HVAC systems and water heaters) use Part II of Form 5695
- You will need the 14-character Qualified Manufacturer Identification Number(s) to take the credit for most products. (Exception: No identification numbers are required for insulation and air sealing materials.)
- File the Form 5695 with your Form 1040. The form will direct the credit to the appropriate place on the Form 1040, reducing your tax liability.
- If you can’t take the full credit in 2025, you can carry it forward to future years.
Do your 2025 projects qualify?
Hopefully your home improvements are eligible for the credits. You’ll want to double-check to be sure.
Heat pumps and heat pump water heaters need to meet or exceed efficiency thresholds in effect at the beginning of the year when the heat pump was installed. Check the Energy Star Product Finder to see if your heat pump qualifies. A credit of 30%, up to $2,000, is available.
Geothermal heat pumps must meet Energy Star requirements in effect at the time of purchase to receive a 30% credit.
Battery storage technology must have a capacity of at least 3 kilowatt hours. The credit covers 30% of the cost.
Solar water heaters must be certified by the Solar Rating Certification Corporation or a comparable entity endorsed by your state. The credit covers 30% of the cost.
Insulation and air sealing materials or systems that meet International Energy Conservation Code (IECC) standards in effect as of the beginning of the calendar year that is two years prior to the calendar year in which such component is placed in service. For example, materials or systems installed in 2025 must meet the IECC standard in effect on Jan. 1, 2023. These items don’t have a specific credit limit, other than the maximum credit limit of $1,200.
Exterior doors must meet applicable Energy Star requirements. Credit is limited to $250 per door and $500 total.
Exterior windows and skylights must meet Energy Star Most Efficient certification requirements. Credit is limited to $600 total.
Note that the combined credits for improvements to the building envelope (e.g., insulation, doors, windows, energy audit, etc) are capped at $1,200 total for the year.
For more details on these and on other credits visit the IRS web pages on home energy efficiency and clean energy credits.
The fine print
Keep in mind that the credit is only available for homes within the U.S., and only for your primary home. Also, if your home is used more than 20% for business, the credit is based on the portion of the home devoted to personal use.
If you received any financial incentives, like subsidies from your utility or rebates, you may need to factor that when calculating your expenses. Visit the IRS for details.