Energy-efficient home improvement tax credits expire soon

The ticking clock on federal tax credits for home energy improvements has sped up significantly. Multiple incentives that were scheduled to last through 2032 will instead expire at the end of this year, due to the One Big Beautiful Bill Act signed into law in July.

If you’ve been planning on making energy-efficient improvements to your home, with an eye toward using the credits to help offset the expense, it’s time to act. Eligibility for the credits on your 2025 taxes requires that a qualifying purchase or project be underway by Dec. 31.

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Energy tax credit basics

Person working on a heat pump — An upgraded, more energy-efficient heat pump could result in a tax credit.(Getty Images/JulPo)

Energy tax credits were implemented to encourage homeowners to invest in more efficient systems and materials for their homes by offering a tax incentive for efficiency upgrades. The Energy Efficient Home Improvement Credit applies to the following residential improvements when they meet qualifying requirements: exterior doors, windows, skylights and insulation materials; central air conditioners, water heaters, furnaces, boilers and heat pumps; biomass stoves and boilers; and home energy audits. The credits are figured as a percentage of a total qualifying project, with annual and lifetime limits that vary by improvement.

The Residential Clean Energy Credit applies to the following improvements when they meet qualifying requirements: solar, wind and geothermal power generation; solar water heaters; fuel cells; and battery storage. The credit for these improvements is 30%, with a limit applying only to fuel cells. (For more details on these credits, visit the Residential Clean Energy Credit and Energy Efficient Home Improvement Credit webpages.)

Identify potential upgrades around your home

Energy audits are harder to find these days, but a qualifying audit could give you a $150... — Energy audits are harder to find these days, but a qualifying audit could give you a $150 credit on taxes. An audit isn’t necessary to make improvements, though.(Getty Images/Warchi)

Home energy audits can identify the places where your house might be least efficient. And if you use a qualifying company before the end of the year, you can claim a $150 credit.

“If you can find one, hire one,” says Craig Senglin, founder of Energy IQ in Dallas. Here’s what he means by “if:” Auditing services are getting harder to come by. Senglin’s company did the audits for years but pivoted into inspections as demand waned. And some companies we contacted said they do audits but don’t have the specific certifications required to qualify for the federal credit.

While an audit could help identify problem areas in your home, if you’re already planning for an improvement, you’re probably aware of your issues. “You can just go for it,” Senglin says. Drawing on his background in energy auditing, he offers an efficiency checklist. “The things that make the biggest difference are the big metal boxes in your house that use all the energy,” Senglin says.

Those “big metal boxes” include appliances, which don’t qualify for these tax credits. But they also include major systems that do, such as HVAC and water heaters. “Changing those out if they’re old and inefficient is always going to be the biggest money saver,” Senglin says.

After these systems, Senglin suggests checking your attic insulation, another improvement that can qualify for a credit. The assessment is straightforward if you can poke your head up into the space. “The big tells are if you can see the top of the joists,” Senglin says. If you can, that means you probably have only 5 or 6 inches of insulation — and he recommends at least 12 inches for greatest efficiency in Texas heat.

Your crawl space might be slightly trickier to access, but if you can, you should also check for insulation there. Senglin says many older homes are exposed beneath the subfloor. Insulating with spray foam or more traditional rolls may qualify for a credit and have a noticeable impact on comfort, especially in cold weather.

Caulk and weather-stripping fall into the same “building envelope” category as insulation and may qualify for the tax credits as well. A simple visual inspection is often enough to check these features.

“You’ve got an HVAC system that is either warming or cooling the air in your house to 75 degrees, roughly,” Senglin says. “You want to hold that 75-degree air in your house as long as possible; you don’t want it to go out through cracks or gaps.”

New windows will be more efficient, but Energy IQ's Craig Senglin says the tax credit won't... — New windows will be more efficient, but Energy IQ’s Craig Senglin says the tax credit won’t do much to cover the cost of the replacements, and the impact on your utility bill won’t be significant.(Getty Images/Brizmaker)

Doors and windows both can qualify for credits, too. But Senglin puts them at the bottom of his recommendation list. New doors and windows should be more efficient, but they’re big-ticket items and, in his experience, least likely to move the needle much on your energy bill. The credit limits barely make a dent in the cost of these improvements.

If your windows are old but “in good repair and sealed around the frame with caulk, I’d leave it in place as long as possible, because you’re never going to get your money back,” Senglin says. But if you feel air leaking and you know it’s time to replace the windows, you may as well take advantage of the credit and start the work before you welcome 2026.

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