Introduction
If you made energy-efficient upgrades to your home in 2025, you may qualify for a tax credit that
reduces your federal tax bill. Under IRC § 25C and IRC § 25D, homeowners can claim credits for
installing solar panels, energy-efficient windows, heat pumps, and more.
The IRS offers two main tax credits for energy-efficient home improvements:
-  Energy Efficient Home Improvement Credit (IRC § 25C) – Covers energy-saving upgrades like
insulation, doors, windows, and HVAC systems. -  Residential Clean Energy Credit (IRC § 25D) – Covers solar, wind, and geothermal energy
systems.
This guide explains who qualifies, what improvements are eligible, and how to claim the credit in
2025.
Who Qualifies for the Energy Tax Credit?
You may qualify if:
- Â You own your home (renters do not qualify).
- Â The home is your primary residence (some credits apply to second homes).
- Â You made qualifying energy-efficient improvements in 2025.
- Â You have a tax liability (credits are non-refundable).
What Home Improvements Qualify for the Tax Credit?
1. Energy Efficient Home Improvement Credit (IRC § 25C)
- Â Covers up to 30% of costs, with annual limits for each upgrade.
- Â Maximum credit: $3,200 per year.
| Improvement | Credit Amount | Annual Cap |
|---|---|---|
| Energy-efficient windows | 30% of cost | $600 |
| Exterior doors | 30% of cost | $500 |
| Insulation, air sealing | 30% of cost | No cap |
| Heat pumps, biomass stoves | 30% of cost | $2,000 |
| Electrical panel upgrades | 30% of cost | $600 |
2. Residential Clean Energy Credit (IRC § 25D)
- Â Covers 30% of the cost of renewable energy systems.
- Â No annual limit on the credit amount.
| Improvement | Credit Percentage |
|---|---|
| Solar panels | 30% |
| Solar water heaters | 30% |
| Wind turbines | 30% |
| Geothermal heat pumps | 30% |
| Battery storage (3kWh+) | 30% |
How to Claim the Energy-Efficient Home Improvement Credit
Step 1: Gather Required Documents
- Â Keep receipts and manufacturer certification statements for eligible improvements.
- Â Ensure contractors provide documentation proving energy efficiency compliance.
Step 2: Complete IRS Forms
-  Form 5695 – Residential Energy Credits
-  Form 1040, Line 5 of Schedule 3 – Report the credit amount
Step 3: File Your Tax Return
-  The credit is non-refundable, meaning it can reduce your tax bill to zero but won’t generate
a refund. - Â If your credit exceeds your tax liability, you may carry forward unused amounts to future
years.
IRS Forms & Compliance Checklist
-  Form 1040 – Main tax return
-  Form 5695 – Energy-efficient home improvements
-  Receipts and manufacturer statements – Required for IRS compliance
Conclusion
The Energy-Efficient Home Improvement Credit and Residential Clean Energy Credit help
homeowners reduce tax liability while making eco-friendly upgrades. If you installed solar panels,
new windows, or an energy-efficient HVAC system, make sure to claim your tax credit in 2025.
For expert tax guidance, schedule a consultation with Anshul Goyal, CPA EA FCA, a licensed tax
professional and IRS representative.
Frequently Asked Questions (FAQs)
1. Can renters claim the energy tax credit?
No, the credit is only for homeowners.
2. Can I claim the credit for improvements made on a second home?
The Residential Clean Energy Credit applies to second homes, but the Energy Efficient Home Improvement Credit does not.
3. Is there an income limit for claiming the credit?
No, there are no income limits, but the credit is non-refundable.
4. Can I carry forward unused credits?
Yes, unused portions of the credit can be carried forward to future years.
5. Can I claim both the energy-efficient and clean energy credits?
Yes, if you made multiple qualifying improvements.
About Our CPA
Anshul Goyal, CPA EA FCA is a licensed Certified Public Accountant and an IRS Enrolled Agent (EA).
He specializes in energy tax credits, home improvement deductions, and IRS compliance.
Schedule a consultation today with Anshul Goyal, CPA, to maximize your tax savings.