Energy Efficient Home Improvement Credit 25C
What qualifies?
The 25C tax credit is used to get money back on energy-efficient improvements in your home.
Qualified energy-efficient improvements include:
- Insulation or air sealing material or system
- Exterior doors that meet Energy Star requirements
- Windows and skylights that meet Energy Star requirements
- Efficient central air conditioners
- Efficient natural gas, propane, or oil water heaters
- Efficient natural gas, propane, or oil furnaces and hot water boilers
- Electric upgrades to panelboards, subpanel boards, branch circuits, or feeders
- Home energy audits
- Heat pump and heat pump water heaters
- Electric or natural gas heat pumps
- Electric or natural gas heat pump water heaters
- Biomass stoves and biomass boilers
Incentive value
The tax credit is 30% of qualified expenses, with specific limits determined by the project type. The maximum credit you can claim each year is $3,200 total, with $2,000 per year for qualified heat pumps, biomass stoves or biomass boilers and $1,200 for all other energy-efficient home improvements.
The credit has no lifetime dollar limit. You can claim the maximum annual credit every year that you make eligible improvements until 2033.
| Energy Efficient Home Improvement Credit (25C) Projects | ||
|---|---|---|
| Project | Amount | Requirements |
| Exterior doors | 30% of costs, up to $250 per door and $500 total; cannot include labor costs | Energy Star Standard |
| Exterior windows and skylights | 30% of costs, $600 total; cannot include labor costs | Energy Star Standard |
| Insulation and air sealing materials or systems | 30% of costs; cannot include labor costs | International Energy Conservation Code |
| Home energy audit | $150 per year | Tax credit specifications |
| Air conditioners | 30% of costs, up to $600; can include labor costs | Consortium for Energy Efficiency (CEE) highest efficiency tier |
| Biomass stoves and boilers | $30% of costs, up to $2,000 | Consortium for Energy Efficiency (CEE) highest efficiency tier |
| General appliances | 30% of costs, up to $2,000 for heat pump and biomass measures | Consortium for Energy Efficiency (CEE) highest efficiency tier |
| Electric or natural gas air source heat pump | 30% of costs, up to $2000 across all heat pumps; can include labor costs | Consortium for Energy Efficiency (CEE) highest efficiency tier |
| Natural gas, propane, or oil Furnace | 30% of costs, up to $600; can include labor costs | Consortium for Energy Efficiency (CEE) highest efficiency tier |
| Electric or natural gas heat pump or heat pump water heater | 30% of costs, up to $2000 across all heat pumps; can include labor costs | Consortium for Energy Efficiency (CEE) highest efficiency tier |
| Gas water heater | 30% of costs, up to $600; can include labor costs | Consortium for Energy Efficiency (CEE) highest efficiency tier |
This can be used with other federal incentives like the Home Efficiency Rebate and Home Electrification and Appliance Rebate, which will lower costs even more.
Who is eligible?
- An individual or household who installs a qualified clean energy project at their primary residence in the United States.
- If your home is partly used for business the credit follows a different rate, which you can find here.
When the credit is available?
The 25C credit is available for purchases on or after January 1, 2024, through December 31, 2032
How to claim the credit
You may claim the credit when you file your tax return by submitting Form 5695, Residential Energy Credits. You must claim the credit for the tax year when the project is installed, not purchased. The value of the credit will be reduced from the amount of taxes you owe. The credit is not refundable, so the credit amount you receive cannot exceed the amount you owe in tax.
When calculating your credit, you may need to subtract subsidies, rebates, or other financial incentives from your qualified property expenses because they are considered a purchase price adjustment.
Visit the federal website here for more details on what qualifies and how to use the credit.
Disclaimer: None of the information presented on this website should be considered official legal or financial advice. Please contact a licensed tax professional for additional information.