Tax Year 2025 represents a strict deadline for homeowners seeking federal tax credits for home energy-efficient improvements. The passage of the One Big Beautiful Bill Act (OBBBA) accelerated the expiration of most residential energy tax benefits. Homeowners must complete and place qualifying property in service on their U.S. residence before December 31, 2025, to claim these savings.
1. The Energy Efficient Home Improvement Credit (EEHIC) (Section 25C)
The EEHIC provides tax benefits for certain equipment purchases and home improvements such as adding insulation, energy audits, or replacing windows and doors. For Tax Year 2025, this credit is generally equal to the lesser of 30% of the cost or an annual $1,200 limit.
Specific improvements have their own limits: exterior windows and skylights are capped at $600 per year, and exterior doors are limited to $250 per door (up to $500 annually). However, if you install a qualified electric or natural gas heat pump or a biomass stove/boiler, you can claim up to an additional $2,000 per year. This allows for a total possible annual EEHIC of up to $3,200 through the end of 2025. Note that this is a non-refundable credit, and any unused amount will not carry forward.
2. The Residential Clean Energy Credit (RCEC) (Section 25D)
The RCEC applies to the installation of renewable technology such as solar panels, residential wind turbines, geothermal heat pumps, fuel cells and battery storage technology. These may be installed on your main home or your secondary residence, provided that you live in it part-time, and don’t rent it out to others.
The RCEC is worth 30% of your qualified expenses for property placed in service through December 31, 2025. If this non-refundable credit exceeds your tax liability for the year, the unused portion is beneficial because it can be carried over to offset tax owed in future years.
Watch our video, "How to Enter Home Energy Tax Credits" to learn how TurboTax can help you accurately report your qualifying improvements.
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