The Residential Energy Credits were expanded and renamed under the Inflation Reduction Act of 2022. However, legislation enacted in 2025 accelerated the end of these tax breaks, making them unavailable for most home energy improvements made after December 31, 2025.
The Residential Energy Credits included two separate tax credits:
- The Residential Clean Energy Credit (Part I)
- The Energy Efficient Home Improvement Credit (Part II)
If you installed qualifying energy-efficient equipment or made eligible home improvements before the credits expired, you may still be able to claim them on the appropriate tax return.
Can I Claim a Residential Energy Credit on My 2026 Tax Return?
For tax year 2026, taxpayers cannot claim either residential energy credit for new improvements made during 2026 because these credits expired after December 31, 2025. You may still claim a credit on an amended return if you were eligible for the credit in a prior tax year but did not originally claim it.
Residential Clean Energy Credit (Part I)
The Residential Clean Energy Credit replaced the former Residential Energy Efficient Property Credit.
For qualifying property placed in service after December 31, 2021, and before January 1, 2026, taxpayers could claim a credit equal to 30% of qualified costs.
This credit was available for both existing homes and new construction.
Eligible property included:
- Solar electric panels
- Solar water heating systems
- Small wind energy systems
- Geothermal heat pumps
- Fuel cell property
- Qualified battery storage technology
Most qualifying property had no annual dollar limit. However, fuel cell property was limited to $500 for each one-half kilowatt of capacity.
Energy Efficient Home Improvement Credit (Part II)
The Energy Efficient Home Improvement Credit replaced the former Nonbusiness Energy Property Credit.
2023 Through 2025 Rules
For qualifying property placed in service from January 1, 2023, through December 31, 2025, the credit equaled 30% of eligible costs for:
- Qualified energy efficiency improvements
- Residential energy property
- Home energy audits
The previous $500 lifetime limit was eliminated and replaced with annual limits. Taxpayers could generally claim up to $1,200 per year, subject to the following limits:
- $250 per qualifying exterior door (up to $500 total)
- $600 for exterior windows and skylights
- $600 for certain energy property, including central air conditioners, natural gas, propane, or oil furnaces, and hot water boilers
- $150 for a qualifying home energy audit
There was no separate limit for insulation and air sealing materials other than the overall $1,200 annual cap.
Taxpayers could also claim up to $2,000 annually for:
- Qualified heat pumps
- Heat pump water heaters
- Biomass stoves and boilers
Because the $2,000 limit was separate from the $1,200 limit, the maximum annual credit could be as much as $3,200.
2022 Rules
For property placed in service through December 31, 2022, the credit was subject to different rules.
The credit generally consisted of:
- 10% of qualified energy efficiency improvements, plus
- Certain residential energy property costs
The credit was limited to:
- A lifetime maximum of $500 for all tax years after 2005
- A lifetime maximum of $200 for windows
- $50 for certain advanced main air circulating fans
- $150 for qualifying furnaces and hot water boilers
- $300 for certain energy-efficient building property
This credit was available only for existing homes and not for new construction.
What Is Considered a Home?
For purposes of these credits, a home generally includes:
- A house
- Houseboat
- Mobile home
- Cooperative apartment
- Condominium
- Manufactured home that meets federal construction and safety standards
The home must meet the residency requirements that applied for the tax year in which the credit was claimed.
Important: Basis Reduction Rules
If you claim a Residential Clean Energy Credit for your home, you must generally reduce your home's tax basis by the amount of the credit received. This can affect the calculation of gain or loss if you later sell the property.