Credit for Energy Efficient Home Modifications
Caution
Under OBBBA this credit's sunset date has been moved up to December 31, 2025 and the credit is no longer available after 2025.
Overview
Residential Energy Property Credit – Sec 25C
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Sunsets December 31, 2025
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Credit increased to 30%
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Lifetime limit eliminated
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Per item credit limit included in chapter chart
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Max Credits Per Year (Each figured separately):
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Most items: $1,200
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Home energy audits: $150
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Biomass & heat pump items: $2,000
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Related IRC and IRS Forms & Publications
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Sec 25C - Credit for energy efficient home modifications
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Form 5695 – Residential Energy Credits
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Inflation Reduction Act of 2022
Under Code Sec. 25C a taxpayer will be able to claim a credit for making qualifying energy saving improvements to his existing home. The dollar limits and credit percentages have been modified several times since the credit first became available in 2006.
Credit History
The credit has been available since 2006 with the exception of 2008 when there was no credit. Over the years both the credit percentages and a lifetime credit dollar limit have varied at the will of Congress. This guide only deals with the credit for years 2023 through 2025.
California Differences
California has no equivalent credits. Therefore, the basis of property on which the federal credit is claimed will be different for federal and California.