Published July 2025 by Allied Tax Advisors
Major federal tax credits for energy-efficient home upgrades, electric vehicles, and solar installations are coming to an end soon. If you’ve been considering making these investments, now is the crucial time to act.
Home Energy Improvement Tax Credit
Homeowners, you have until December 31, 2025, to claim federal tax credits for energy-efficient upgrades:
- $1,200/year total annual credit across eligible energy efficiency upgrades (windows up to $600, doors up to $500 total, insulation, electrical panels, and HVAC improvements).
- $2,000/year separate credit for heat pumps, heat pump water heaters, biomass stoves, and boilers.
- $150 bonus credit for certified home energy audits.
Important Notes:
- Credits reset each year—no lifetime limit.
- Improvements must meet Energy Star efficiency standards.
Deadline: Installations must be completed by December 31, 2025.
Electric Vehicle Tax Credits
Electric vehicle (EV) tax credits expire even sooner—after September 30, 2025:
- Commercial Vehicles (Section 45W): Up to $40,000 (heavy trucks) or $7,500 (light EVs).
- New Vehicles (Section 30D): Up to $7,500 for qualifying new EVs.
- Used Vehicles (Section 25E): Up to $4,000 for qualifying used EVs. (Used EVs must be at least two years old and cost less than $25,000.)
Action Required: Vehicle must be delivered and placed in service by September 30, 2025.
Solar Tax Credits
The Residential Clean Energy Credit (RCEC), offering a 30% tax credit for solar panels, solar water heaters, geothermal heat pumps, and wind systems, ends on December 31, 2025.
- 30% Tax Credit: Eligible for installations at primary and secondary residences.
- Credit Details: Credit is non-refundable but unused amounts can roll forward to offset future tax liabilities.
- Key Change: New law eliminates the credit for installations after 2025, despite previous schedules extending through 2034.
Action Required: Complete installation by December 31, 2025, to secure your credit.
Next Steps: Act Now!
Given tight deadlines and possible supply chain challenges:
- Schedule your energy or solar upgrades immediately.
- Order your electric vehicle early to ensure timely delivery.
- Consult your tax advisor to maximize your credits.
- Prepare documentation and IRS Form 5695.
Need Assistance?
For detailed guidance, personalized advice, or questions about claiming your credits, contact us.