If you are planning to make energy-efficient home improvements or purchase an electric vehicle, you will want to act quickly. A number of energy tax credits that are currently available will be eliminated in 2025, some as early as September 30, 2025.

Recent changes under the One Big Beautiful Bill signed into law on July 4, 2025, as Public Law 119-21, significantly change or phase out certain energy tax credits. Acting now could help you lock in valuable savings and lower your tax liability before these credits are no longer available.

What are energy tax credits?

Energy tax credits are incentives offered by the federal government to help you lower your tax liability when investing in renewable energy and energy-efficient technologies. By claiming these credits on your income tax returns, you can reduce your tax liability while making upgrades that save both energy and money. Examples include installing insulated windows or solar panels or purchasing an electric vehicle.

Which energy tax credits end in 2025?

Under the Inflation Reduction Act, signed into law in August 2022, several energy tax credits were extended through 2032, offering long-term benefits for energy-saving investments. Recent changes under the One Big Beautiful Bill, enacted in July 2025, have altered the energy tax credits by accelerating the expiration of certain credits, shortening the window to claim them.

Below are examples of common energy credits that are expiring.

Energy Efficient Home Improvement Credit

As a homeowner, you can reduce your tax liability under Internal Revenue Code (IRC) Section 25C by making improvements that reduce the energy usage in your home, such as upgrading exterior windows and skylights, insultation, and air sealing materials or HVAC systems. You may be able to claim a credit up to $3,200. To qualify, these improvements must be completed by December 31, 2025.

Residential Clean Energy Credit

This credit falls under the IRC Section 25D, which allows you to claim a 30% tax credit on qualified installation costs of renewable energy systems, such as solar panels or battery storage that generate clean power for your residence. To qualify, these systems must be fully installed and placed in service by December 31, 2025.

Clean Vehicle Credit

This credit is available for the purchase of a new or used electric vehicle under IRC Section 30D and 25E. You may claim up to $7,500 for a qualifying new electric vehicle or up to $4,000 for a used electric vehicle. To receive this credit, your purchase of an electric vehicle must be made by September 30, 2025.

Qualified Commercial Clean Vehicle Credit

This tax credit is available to businesses under Section 45W, for the purchase of electric or fuel-cell vehicles that are used exclusively for commercial purposes. The deadline to purchase the vehicle in order to qualify for the credit is December 31, 2025.

Am I eligible for energy tax credits?

Your eligibility depends on several factors, including the type of property you own, the specific improvements or equipment you install, and in some cases, whether the expenses are personal or business-related. Knowing these details ahead of time makes it easier to see which credit you qualify for and helps you to take full advantage of the savings available.

Energy Efficient Home Improvement Credit (IRC Section 25C)

To qualify for the Energy Efficient Home Improvement Credit, you must be a US citizen or resident alien who owns and uses a home located in the US as your primary or secondary residence. Renters and owners of properties used for businesses are not eligible for this credit. The amount of credit is limited to the amount of tax owed.

Residential Clean Energy Credit (IRC Section 25D)

To qualify for the Residential Clean Energy Credit, you must be a US citizen or resident who installed qualifying renewable energy systems to your property located in the US. Eligible homes include:

  • Your main home, whether you own it or rent it out, or
  • A second US home you use part-time and do not rent out.

For mixed-use homes, you can claim a full credit if the business use is 20% or less. If your business use is more than 20%, the credit is limited to the portion of expenses allocable to the non-business use portion.

Clean Vehicle Credit (IRC Sections 30 D & 25 E)

You may be eligible for Clean Vehicle Credit if you purchased a plug-in electric or fuel cell vehicle. For used vehicles, it must be at least two years old, have a sale price of $25,000 or less, and be purchased from a licensed dealer. For new vehicles, it must have a capacity of at least 7 kwh, final assembly in North America, and have a Manufacturer’s Suggested Retail Price (MSRP) of $55,000 or less for cars and $80,000 or less for vans, sport utility vehicles (SUVs), and pickup trucks.

Qualified Commercial Clean Vehicle Credit (IRC Section 45W)

To qualify for a Qualified Commercial Clean Vehicle credit, you must have purchased a qualified commercial clean vehicle for 100% business use, and you must own a business or tax-exempt organization. For businesses, the credit is nonrefundable; therefore, the amount of credit cannot exceed the amount of tax you owe.

How do I claim the credit?

In most cases, you would claim the credit on your 2025 individual or business tax return.

In some cases, you can obtain an advance on the credit at the time you purchase a qualifying vehicle or make a qualifying purchase. In these cases, the advance on the credit reduces the amount you pay upfront, and then you must report the advance on your 2025 tax return. Your tax return will then reconcile the amount of the advance with the final amount of the credit and include the difference on your tax return.

Since 1983, The Wolf Group has assisted individual and business clients in lowering their income tax liabilities through the use of a wide range of tax credits. If you have further questions about your eligibility to claim any of the energy credits above, feel free to contact us for more information.