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The Inflation Reduction Act’s clean energy tax credits have saved more than three million Americans over $8 billion on home upgrades, aiding the shift towards cleaner, lower-cost energy. The credits will expire at the end of 2025, but homeowners can still take advantage of them by scheduling energy-saving upgrades to be completed before the end of the year. Despite the federal rollback, state, local, and utility incentives for clean energy may continue or increase.
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Maximizing the Lifespan of Clean Energy Tax Credits for Homeowners
Implementing energy-efficient home upgrades such as heat pumps, solar power systems, and induction cooktops not only lessens the impact on the environment, but often results in a significant reduction in power bills. However, homeowners must act fast to take advantage of the Inflation Reduction Act’s (IRA) clean energy tax credits and incentives as they are scheduled to cease by the end of 2025. To date, these incentives have aided over 3 million Americans to save more than $8 billion on home upgrades.
Landon Wimmer from Empower Home Service pointed out, “The clean energy tax credit has been one of the most important federal incentives for homeowners and businesses to invest in renewable technologies. It covers up to 30% of the cost and has helped accelerate our country’s shift toward cleaner, lower-cost energy.”
Understanding the Clean Energy Tax Credit
The clean energy tax credit, which is composed of the Energy Efficient Home Improvement Credit (25C) and the Residential Clean Energy Credit (25D), offers financial relief to homeowners who make improvements that enhance energy efficiency. These improvements can include heat pumps, upgraded insulation, rooftop solar, and battery storage.
Why are the Clean Energy Tax Credits Being Phased Out?
The “One Big Beautiful Bill” passed by the Congress in 2025 has phased out the clean energy tax credits. “Despite being popular, bipartisan and highly effective, the credits were targeted as part of a broader effort to undermine clean energy development, which had been booming since the passage of the IRA,” said Alex Amend of Rewiring America. This move translates into fewer resources available for American families to carry out necessary home upgrades and reduce their energy costs.
End Date for the Clean Energy Tax Credits
Both the 25C and 25D credits for homeowners will officially expire at the end of 2025, which is almost a decade before originally planned. Commercial projects, however, have until July 4, 2026, to commence and must be completed by December 31, 2027. “There’s no soft landing here, no phase-out, no gradual step-down,” says Wimmer. “After that, most of the major clean energy incentives are off the table.”
Maximizing the Clean Energy Tax Credits Before They End
Homeowners are encouraged to get quotes and schedule their projects as soon as possible for completion before the end of 2025. This ensures that they can receive the credits since the project has to be completely finished by Dec. 31, 2025. In addition to federal credits, homeowners can also leverage state, local, and utility incentives to increase their savings. Useful resources like Rewiring America’s Tax Credit Cheat Sheet, Savings Calculator and Personal Electrification Planner can assist homeowners in finding relevant incentives and planning their transition to clean energy.
Impact of the OBBB on Clean Energy
The OBBB, apart from eliminating federal clean energy tax credits and incentives for residential homes, is expected to increase U.S. energy costs by over $50 billion annually and reduce clean energy generation by 820 terawatt-hours over the next decade. Jarell Mason of Aurora Solar emphasized the need to protect these credits for the sake of a cleaner, more resilient energy future.
Potential for Continued State and Local Clean Energy Credits
Despite the federal rollback, many states, local governments, and utility companies continue to offer clean energy tax credits and incentives. For instance, in July 2025, California announced that it would re-introduce the Tech Clean Rebate. Paul Lambert of Quilt heat pumps noted that given growing public interest in home energy upgrades, more action is expected at the state and local levels to fill the gap left by the federal rollbacks.
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