Energy Efficient Home Improvement Credit

Last updated: July 27, 2026

The Energy Efficient Home Improvement Credit was a nonrefundable federal income tax credit. It was not a grant, rebate, repair loan, or cash payment from a contractor. A qualifying credit reduced federal income tax owed, but it did not generally create a refund beyond the tax liability available for the credit.

This guide explains the final 2025 rules, claim records, the 2026 change, and current help for energy-saving repairs.

Quick Answer by Situation

Did the Energy Efficient Home Improvement Credit End?

Yes. Federal law ended the credit for property placed in service after December 31, 2025. The IRS confirms that no Section 25C credit is allowed for qualifying property first placed in service in 2026 or later.

“Placed in service” usually means the improvement was installed, completed, and ready for its intended use. A signed contract, deposit, purchase receipt, or delivery date by itself does not move a 2026 installation back into 2025.

What the credit was

• A federal tax credit: It could reduce federal income tax owed.
• Annual: The limits generally reset each tax year while the credit was in effect.
• Based on qualifying costs: The percentage was generally 30%, subject to category and annual caps.
• Not a grant: The government did not send repair money before the project.
• Not a rebate: It was not an instant discount at checkout.
• Not refundable: Unused Section 25C credit generally could not be paid out or carried forward.

2025 Credit Amounts and Limits

For qualifying property placed in service in 2025, the credit was generally 30% of eligible costs, subject to two main annual limit groups. A household using both groups could potentially reach a total of $3,200 for the year, but only if the expenses, property, home, and tax liability all qualified. The IRS credit limits explain the category caps.

The general group had a combined annual limit of $1,200. The heat pump, heat pump water heater, biomass stove, and biomass boiler group had a separate combined annual limit of $2,000.

Solar panels, battery storage, and some other clean-energy property were covered by a separate federal credit, not the Energy Efficient Home Improvement Credit. That separate Residential Clean Energy Credit also ended for expenditures made after December 31, 2025. Do not combine the rules for the two credits.

Who Could Qualify for a 2025 Credit?

There was no general federal income ceiling for Section 25C. Because the credit was nonrefundable, the actual benefit depended on available federal income tax liability.

Home-use rules differed by improvement

For building-envelope items such as qualifying doors, windows, skylights, insulation, and air sealing, the home generally had to be an existing home in the United States that the taxpayer owned and used as a principal residence.

For qualified energy property such as certain heat pumps, water heaters, furnaces, boilers, and central air conditioners, the residence rules could be broader. The property generally had to be installed in an existing home in the United States used by the taxpayer as a residence. Renters and second-home owners should check the exact 2025 instructions for the item claimed.

New construction generally did not qualify

The credit was for improvements to an existing home. Equipment or materials installed as part of a newly constructed home generally did not qualify for Section 25C.

Business use could reduce the credit

If part of the home was used for business, special limits applied. A small business-use percentage might not reduce the personal credit, but greater business use could require allocating costs.

Joint owners and shared homes need extra care

Unmarried co-owners, family members sharing a home, condominium owners, and cooperative housing shareholders may need to allocate costs and limits. The IRS published corrections affecting some joint-occupant calculations. Use the current 2025 instructions rather than an old saved copy.

How to Claim the Credit for 2025 Work

2025 filing deadlines

The regular filing deadline for most 2025 individual returns was April 15, 2026. A timely filing extension generally allowed filing through October 15, 2026, although an extension to file was not an extension to pay. People filing late should review penalty and refund rules with the IRS or a qualified preparer.

If a 2025 return was already filed without the credit, an amended return may be possible. In general, a refund claim must be filed within three years after the original return was filed or two years after the tax was paid, whichever is later, but individual facts can change the deadline.

Records and QMID Rules

A strong claim depends on records that show what was installed, where it was installed, when it was ready to use, and how much the taxpayer paid.

Keep these documents

• Final invoice showing the installation address, date completed, equipment, materials, and labor.
• Proof of payment, such as a canceled check, card statement, financing statement, or paid receipt.
• Manufacturer name, exact model number, and efficiency certification.
• The four-character QMID for each specified product that required one.
• Manufacturer certification statement or product documentation.
• Records for rebates, utility incentives, insurance payments, or other subsidies.
• Home energy audit report, if claiming the audit credit.
• Documents showing ownership, residence use, and any business-use percentage.

Which items needed a QMID?

For specified property placed in service in 2025, a four-character QMID was required on Form 5695. This generally included qualifying doors, windows, skylights, and qualified energy property such as heat pumps and certain heating, cooling, and water-heating equipment.

Insulation and air-sealing materials or systems and qualifying home energy audits did not require a QMID. A product name, model number, PIN, UPC, or serial number was not automatically a substitute for the required QMID.

The IRS provides a qualified manufacturer list. Being made by a listed manufacturer does not mean every product from that company qualifies. The specific product still had to meet the federal requirements.

How rebates and financing affect the cost

A rebate or subsidy may reduce the amount treated as paid for the federal credit. Utility subsidies that are excluded from income generally reduce the eligible cost. Amounts paid with certain subsidized energy financing also may not be used in the calculation.

Do not assume that a contractor’s “tax credit price” is the amount that belongs on Form 5695. Start with the actual eligible cost after required reductions and category limits.

Help Available for 2026 Energy Projects

The federal Section 25C credit is closed for new 2026 work, but other programs may help. Availability depends on location, income, home type, utility company, funding, and whether approval is required before work begins.

Home Energy Rebates

Type of help: Point-of-sale rebate or project rebate administered by a state, territory, or Tribe. It is not the expired federal tax credit.

As of July 27, 2026, Home Energy Rebates were available in select states, with rules and launch dates set locally. The initiative includes two programs. The Home Efficiency Rebates program can support whole-home energy improvements, with maximum rebate levels that may reach $8,000 depending on modeled or measured savings, household income, and local program rules. The Home Electrification and Appliance Rebates program can provide combined rebates up to $14,000 for eligible lower- and moderate-income households, subject to product caps and local availability.

Examples of maximum electrification rebate caps include up to $8,000 for a heat pump, $1,750 for a heat pump water heater, $840 for an electric stove or heat pump clothes dryer, $1,600 for insulation and air sealing, $4,000 for an electrical panel, and $2,500 for electrical wiring. These are maximum federal framework amounts, not promises that every household or location offers the full amount.

Under the federal framework, households below 80% of area median income may qualify for up to 100% of eligible project costs under the electrification program, while households from 80% to 150% may qualify for up to 50%, subject to local rules and caps. Review the HEAR income rules and check your local program through the DOE rebate page.

Weatherization Assistance Program

Type of help: Direct weatherization service, not a cash grant paid to the household.

The Weatherization Assistance Program, or WAP, helps eligible households reduce energy costs and improve health and safety. Services may include an energy audit, insulation, air sealing, heating-system work, ventilation measures, and other cost-effective improvements selected after an inspection.

Federal guidance generally allows eligibility at or below 200% of the federal poverty level or for households receiving Supplemental Security Income, although states may use other approved standards. Homeowners and renters may apply. Priority often goes to older adults, people with disabilities, families with children, and households with high energy burdens. Funding and wait times vary.

Use the official WAP application guide or start with our home repair assistance guide.

LIHEAP energy crisis and repair help

Type of help: Bill assistance, crisis assistance, weatherization, or limited energy-related repair, depending on the local program.

The Low Income Home Energy Assistance Program may help with heating and cooling bills, shutoff crises, weatherization, and some minor energy-related repairs. It is not a general home-remodeling program. Rules, seasons, benefits, and covered repairs vary by state, Tribe, and local agency.

Find the local office through the official LIHEAP directory and review our guide to LIHEAP crisis repair help.

Utility and manufacturer rebates

Type of help: Rebate or discount, usually offered after approval or purchase of an eligible product.

Electric and gas utilities may offer rebates for heat pumps, water heaters, insulation, air sealing, smart thermostats, efficient appliances, or home energy assessments. Search by ZIP code using the ENERGY STAR rebate finder, then confirm the current rules directly with the utility.

Ask whether the rebate must be reserved before purchase, whether a participating contractor is required, whether income-qualified bonuses are available, and whether the rebate can be combined with a state home-energy rebate.

Local home repair programs

Type of help: May be a grant, forgivable loan, deferred-payment loan, low-interest loan, or direct repair service.

Counties, cities, nonprofit groups, and housing agencies may fund health and safety repairs, accessibility work, heating replacement, roof repair, electrical work, or code corrections. Many programs are limited to owner-occupied homes and households below a local income limit. Some place a lien on the home or require repayment if the owner sells or moves.

Use our local program search guide, rural repair guide, and application checklist. A HUD-approved housing counselor can also help explain repair financing and local options. Call 800-569-4287 or use the HUD counselor search.

211 and nonprofit referrals

Type of help: Referral service. It does not guarantee funding.

Call 211 or visit 211.org and ask for weatherization, furnace repair, cooling assistance, senior home repair, disability-related home modification, or emergency utility help. Also review where to start when several problems need attention.

Mistakes and Scams to Avoid

Practical 2026 Action Plan

If an application is denied or delayed, ask for the reason in writing and whether there is an appeal, reconsideration, or waitlist process. Our denial guide explains the next steps.

Frequently Asked Questions