If you are planning an efficiency or solar project in 2026, the most important fact is also the least welcome one: the two federal tax credits most homeowners relied on are no longer available for new work. This guide explains what ended, what can still be claimed, and what to budget with instead.
What ended
The One Big Beautiful Bill Act, signed on July 4, 2025, ended several home energy credits early:
- Energy Efficient Home Improvement Credit (Section 25C). This covered heat pumps, insulation, windows, doors, electrical panel upgrades and energy audits, with annual limits (up to $3,200 in total). It no longer applies to expenditures made after December 31, 2025.
- Residential Clean Energy Credit (Section 25D). This was the 30% credit for solar panels, batteries and geothermal systems. It also ended for expenditures after December 31, 2025.
- Alternative Fuel Vehicle Refueling Property Credit (Section 30C). The credit for EV chargers ended for property placed in service after June 30, 2026.
What you can still claim
Work that was finished and in use by the end of 2025 still counts for the 2025 tax year. The IRS handles this on Form 5695, and its instructions confirm that the credits cannot be claimed for expenditures made after December 31, 2025. If you completed a project in 2025 and did not claim the credit, a tax professional can tell you whether amending your return makes sense.
The date that matters is when the installation is complete, not when you signed the contract or paid a deposit. A system you ordered in 2025 but that was installed in 2026 does not qualify.
What to budget with in 2026
As of this review there is no federal tax credit that replaces 25C or 25D for homeowners’ efficiency upgrades. Real savings for 2026 projects come mostly from three places:
- State-run home energy rebates funded through the Inflation Reduction Act (HEAR and HOMES), which depend on your income and your state’s rollout. See our guide to HEAR and HOMES.
- Utility rebates from your electric or gas company, often for heat pumps, heat pump water heaters and insulation.
- State and local incentives such as sales tax exemptions, property tax exemptions or low-interest loans, which vary widely.
Practical steps
- Do not count on a federal credit when comparing quotes for 2026 work.
- Ask your state energy office which rebate programs are open now, and whether you need approval before buying.
- Check your utility’s rebate page, since these often have their own deadlines and equipment lists.
- Keep invoices, model numbers and installation dates for every project, even when no credit applies.
Frequently asked questions
Is there a new credit for 2026? Not for the upgrades above. Programs and laws can change, so check current IRS guidance before you decide.
Can an unused 25D credit be carried forward? The 25D credit has historically allowed unused amounts to carry forward to later years. Confirm how this applies to your return with a tax professional.
Common mistakes to avoid
- Treating the payment date as the project date. A deposit paid in 2025 does not help if the system was not installed and working until 2026.
- Relying on old articles. Many pages still describe 25C and 25D as available through 2032. That was the original schedule, and it was shortened.
- Assuming a contractor’s “tax credit” discount is real. If a quote lowers the price because of a federal credit for 2026 work, ask what law it relies on and get the answer in writing.
- Skipping records. If you installed equipment in 2025, keep the invoice, the manufacturer’s certification statement and the installation date.
Which upgrades are still worth doing without a credit?
Without a federal credit, the case for each upgrade rests on bill savings, comfort and any state or utility rebates. Air sealing and attic insulation often have the best return per dollar. Heat pumps tend to make the most financial sense when they replace oil, propane or electric resistance heating, or when you already need to replace an air conditioner. Rooftop solar is now a purchase decision based on your electricity rates, your state’s net metering rules and any local incentives, so compare several quotes and ask how exports to the grid are credited.
More questions
Does the 45L new home credit still exist? It is a builder credit rather than a homeowner credit, and its end date is earlier than originally planned, so ask your builder how it affects the price.
Where can I check the rules myself? The IRS guidance on the credit and on Form 5695 is the authoritative source, and it states that the credits cannot be claimed for expenditures made after December 31, 2025.