7 upgrades that still qualify for 2025 energy credits—and 5 that don’t
Energy tax rules shifted significantly under the Inflation Reduction Act, but many of the most valuable home upgrades still qualify for credits in 2025 while others no longer make the cut. If you are planning a renovation, the difference between a qualifying project and a near miss can mean hundreds of dollars in lost savings.
To help you prioritize, here is a clear rundown of seven upgrades that still earn you federal energy credits in 2025 and five common projects that do not, so you can line up your contractor bids with what the tax code actually rewards.
1. Energy Efficient Home Improvement Credit: The 30% workhorse
The backbone of 2025 home energy incentives is the Energy Efficient Home Improvement Credit, which lets you claim 30 percent of eligible costs for certain upgrades to an existing primary residence. The credit applies to a wide range of improvements, from better windows to high efficiency heating and cooling, as long as the work is installed in your home and meets the technical standards in the law. The program is structured as a yearly benefit, so you can spread projects over multiple years instead of trying to do everything at once.
According to the Internal Revenue Service, More In Credits and Deductions guidance confirms that you can claim the credit for qualifying improvements placed in service through December 31, 2025, with percentage limits and per item caps layered on top of the 30 percent rule. The IRS also notes that There are limits on the allowable annual credit and that you cannot carry any unused portion forward to future tax years, which makes timing and sequencing your projects a real financial strategy rather than an afterthought.
2. Seven upgrades that still qualify for 2025 credits
First, high performance windows and skylights remain a straightforward way to tap the 30 percent credit in 2025, as long as the products meet efficiency standards and are installed in your primary home. The federal program that tracks qualifying products explains that certain windows and skylights can qualify for a tax credit when they meet specific performance criteria, so you will want to match your purchase to those labeled options rather than assuming any glass upgrade will do. Second, insulation and air sealing are still eligible, provided the materials are designed to reduce heat loss or gain and meet the latest Insulation and International Energy Conservation Code (IECC) standards for your location.
Third, qualifying central air conditioners, heat pumps, and efficient furnaces can still earn you a credit when they meet the efficiency thresholds spelled out in the law. The IRS notes that Electric or natural gas heat pumps, central air conditioners, and certain Biomass stoves and boilers can qualify, subject to per item dollar caps. Fourth, residential energy property like advanced panelboards, sub panels, and related wiring that support these systems can count as Residential energy property, and the IRS confirms that installation labor for this category may be included in the credit calculation. Fifth, the law still rewards certain water heaters and boilers that meet high efficiency criteria, which can be especially valuable if you are replacing an older tank that is near the end of its life.
Sixth, on the renewable side, the separate Residential Clean Energy Credit continues to cover 30 percent of the cost of qualifying systems such as solar electric panels, solar water heaters, and similar equipment installed on your home. IRS guidance on the Residential Clean Energy Credit explains that Solar electric panels and other systems qualify because they generate clean energy for your home, and that the credit applies to both the equipment and certain related costs. Seventh, the Inflation Reduction Act also expanded the annual cap on the Energy Efficient Home Improvement Credit so that, After 2022, the credit increases to $1,200 annually for many improvements, with separate caps for specific items, which effectively turns your home into a multi year tax planning project rather than a one time shot.
3. Five popular projects that do not qualify
Even with those generous provisions, several common home upgrades still fall outside the credit rules in 2025, and knowing them can save you from building a tax break into your budget that never materializes. One of the biggest surprises for many homeowners is that most roofing work does not qualify, even if you choose a lighter color or more durable material that you hope will keep your home cooler. Tax guidance for homeowners notes that the Energy Tax Credit applies to certain energy saving components, but that a roof that primarily serves a roofing or structural function does not qualify, even if it has some reflective or insulating properties.
Similarly, purely cosmetic window replacements that do not meet the efficiency thresholds, or decorative doors that are not rated as energy efficient, will not earn you a credit, even if they make your home feel more comfortable. The same goes for projects that are primarily structural or aesthetic, such as new siding, interior drywall, or a kitchen remodel that happens to include new lighting but does not involve qualifying energy efficient fixtures. Consumer facing guidance on Which home improvements qualify explains that, generally, expenses made to upgrade your home’s energy performance can qualify for the Residential Clean Energy Credit, but that many comfort or style driven projects do not meet that standard. In short, if the primary purpose is appearance or general maintenance rather than documented efficiency, you should assume it is not credit eligible.
4. How much you can actually claim in 2025
Knowing that a project qualifies is only half the story, because the 2025 credits are capped in ways that can sharply limit how much you get back. For the Energy Efficient Home Improvement Credit, the law sets an annual maximum that applies across all your eligible projects, plus smaller caps for certain categories like windows or doors. Tax professionals point out that, After 2022, the overall credit increases to $1,200 per year for many improvements, which means that a large project may hit the ceiling even if 30 percent of your costs would otherwise be higher. The IRS reiterates that There are limits on the allowable annual credit and that you cannot carry unused amounts forward, so you may want to phase big upgrades over multiple years to maximize your benefit.
For the Residential Clean Energy Credit, the math is simpler but the timing is critical. The credit generally equals 30 percent of the cost of qualifying systems like solar electric panels, geothermal heat pumps, and similar equipment, and it applies to both the hardware and certain related installation costs. IRS instructions for Form 5695 explain that Qualified solar electric property costs are costs for property that uses solar energy to generate electricity for your home, but that some items, such as equipment used to heat a swimming pool, do not qualify for the credit. The same instructions also highlight the Termination of the residential clean energy credits for expenditures made after December 31, 2025, which makes 2025 a pivotal year if you are considering a rooftop solar array or similar system.
On the home efficiency side, consumer guidance illustrates how the percentage and caps interact in real life. One example notes that if you spent $1,200 on a new energy conserving insulation system, the 30 percent credit would normally be $360, but you still need to check how that fits under the annual and per item limits. The same guidance adds a practical reminder to Note, though, the 30 percent credit maximum and the fact that your tax liability must be high enough to absorb the credit in the year you claim it.
5. Fine print that can make or break your credit
Beyond the headline rules, several technical details can determine whether your 2025 project actually qualifies once you sit down to file. One key requirement is that many types of equipment must be produced by a registered manufacturer and meet specific performance criteria. The IRS explains that Manufacturers of qualified energy property must register to qualify products for the Energy Efficient Home Improvement Credit, and that the credit only applies to property acquired from a Qualified Manufacturer, so you should confirm that your contractor is installing listed equipment rather than a look alike that does not meet the standard.
Another nuance is that some of the electrical work that supports your new systems can qualify, but only when it is directly tied to eligible equipment. IRS instructions for Form 5695 clarify in Section Residential Energy Property Expenditures Residential that residential energy property expenditures can include costs for panelboards, sub panelboards, branch circuits, or feeders that are installed to enable the installation and use of qualified energy property. At the same time, a separate overview of Solar and home energy efficiency tax credits notes that The Residential Clean Energy Credit, often referred to as The Residential Clean Energy Credit funded by the IRA, allows households to recoup a portion of their investment in renewable systems, but that you still need to follow the IRS definitions closely when you allocate costs between eligible and ineligible components.
Finally, it is worth remembering that the credit landscape is not static, and some of the most generous provisions are scheduled to sunset or change after 2025. IRS guidance on More In Credits and Deductions for the Residential Clean Energy Credit, along with the IRA overview, underscores that the current 30 percent rate and eligibility rules are tied to specific years. If you are weighing a major project like a whole home heat pump conversion or a solar installation, treating 2025 as a planning deadline rather than a vague target can help you capture credits that may not look as generous in later years.
