With utility costs on the rise and a growing push toward greener living, now might be the perfect time to consider making energy-efficient improvements to your home. And thanks to the recently passed One Big Beautiful Bill Act, there’s still time to take advantage of valuable federal tax credits up to $3,200 in 2025.
But here’s the catch: these credits only apply if the upgrades are installed and placed in service by December 31, 2025. That means homeowners have a limited window to act.
Let’s break down what’s available and how to qualify.
What Energy Tax Credits Can You Claim in 2025?
The updated law provides two main credits for homeowners making qualified energy improvements:
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Up to $1,200 Per Year for Common Energy Upgrades
This credit applies to upgrades made to your primary residence and covers:
- Exterior doors (up to $500 total)
- Windows and skylights (up to $600)
- Insulation and air sealing materials
- Energy-efficient furnaces, boilers, water heaters, air conditioners, and electric panels
These upgrades not only reduce energy usage they can also lead to meaningful savings on your utility bills over time.
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Up to $2,000 Per Year for Advanced Systems
Available for either your primary or second home, this credit supports more advanced installations, including:
- Electric or natural gas heat pumps
- Heat pump water heaters
- Biomass stoves and boilers
These systems represent a bigger investment but can deliver substantial long-term benefits in efficiency and comfort.
Bonus Credit: Home Energy Audits
Homeowners can also claim a $150 credit for a certified home energy audit, which helps identify the most effective upgrades based on your specific home and energy usage.
Before jumping into a renovation project, here are a few important points to keep in mind:
- These are non-refundable credits. They reduce the amount of tax you owe, but won’t generate a refund if you don’t owe taxes.
- Installation matters. To qualify, improvements must be installed and placed in service by December 31, 2025 not just purchased.
- Energy standards apply. The equipment and materials must meet specific energy-efficiency standards. Be sure to verify this before buying or installing.
- Rebates reduce your credit. If you receive a rebate or subsidy (for example, from your utility company), that amount must be subtracted from the cost used to calculate your credit.
Tax rules change and this window won’t stay open. If you’ve been thinking about:
- Replacing old windows
- Upgrading insulation
- Switching to a high-efficiency HVAC system
- Investing in a heat pump or advanced water heater
…then 2025 is your last full year to take full advantage of these credits. After that, the current law is set to expire unless renewed.
At BASC Expertise, we help homeowners understand how their financial decisions like home upgrades impact their taxes. If you’re planning improvements and want to know how the credits apply in your situation, we’re happy to guide you.
Call us today to schedule a consultation, and let’s make sure your energy-efficient investment pays off on your utility bill and your tax return.