Incentives for Households and Individuals

What qualifies: The 25C tax credit is used to get money back on energy-efficient improvements in your home.

Qualified energy-efficient improvements include:

• Insulation or air sealing material or system
• Exterior doors
• Windows and skylights
• Efficient central air conditioners
• Efficient natural gas, propane, or oil water heaters
• Efficient natural gas, propane, or oil furnaces and hot water boilers
• Electric upgrades to panelboards, subpanel boards, branch circuits, or feeders
• Home energy audits
• Heat pump and heat pump water heaters
• Electric or natural gas heat pumps
• Electric or natural gas heat pump water heaters
• Biomass stoves and biomass boilers

Incentive value: The tax credit is 30% of qualified expenses, with specific limits determined by the project type. The maximum credit you can claim each year is $3,200 total, with $2,000 per year for qualified heat pumps, biomass stoves, or biomass boilers and $1,200 for all other energy-efficient home improvements.

The credit has no lifetime dollar limit. You can claim the maximum annual credit every year that you make eligible improvements until 2033.

This can be used with other federal incentives like the Home Efficiency Rebate and Home Electrification and Appliance Rebate, which will lower total project costs. If using rebates you must subtract their value from the project cost on your tax form. This will impact the value of the credit and the tax credit will be applied to your post-rebate cost.

Who is eligible:

An owner-occupied household

A tenant who pays for HVAC or energy audit in their rental home

This tax credit can only be realized as a deduction from annual taxes owed, meaning you must have tax liability greater than the value of the credit in order to receive the benefit.

The credit may not be claimed by homeowners on rental units, but they may be eligible for other incentives.

If your home is partly used for business, the credit follows a different rate, which you can find here.

When the credit is available: The 25C credit is available for purchases on or after January 1, 2023, through December 31, 2032

How to claim the credit: You may claim the credit when you file your tax return by submitting Form 5695, Residential Energy Credits. You must claim the credit for the tax year when the project is installed, not purchased. The value of the credit will be reduced from the amount of taxes you owe. The credit is not refundable, so the credit amount you receive cannot exceed the amount you owe in tax.

When calculating your credit, you need to subtract rebates from your qualified property expenses because they are considered a purchase price adjustment.

Visit the federal website here for more details on what qualifies and how to use the credit.

What qualifies: The 25D tax credit can be used to reduce a percentage of the cost of a qualified clean energy project.

Qualified clean energy projects include:

• Solar electric panels, also known as solar photovoltaics (PV systems), and associated electrical upgrades
• Solar water heaters
• Wind turbines
• Geothermal heat pumps
• Fuel cells
• Battery storage technology, including electrical upgrades

Some technical specifications and standards may apply — view those here.

• The project must meet the following criteria:
• The clean energy equipment must be new, not used.
• The clean energy project must be located at a residence in the United States. The credit is not restricted to a primary residence and can be claimed on any home.
• The clean energy project must be purchased outright, but owners can use financing.

Leased or power purchase agreement (PPA) clean energy projects are not eligible but can instead qualify for the Clean Electricity Investment Tax Credit 48.

Incentive value: The credit is up to 30% of the cost of the project through 2032, 26% in 2033, and 22% in 2034.

Qualified expenses factored into project cost include:

• The clean energy project equipment
• Sales tax on eligible expenses
• Labor costs for on-site preparation, assembly, or installation of qualified equipment, and piping or wiring to connect it to the home

If state, local, or utility rebates lower the cost of your project, the tax credit is calculated after the rebate is applied. Net metering does not impact the tax credit.

If your home is partly used for business, the credit follows a different rate.

Who is eligible:

An individual or household who installed a qualified clean energy project at their residence in the United States.

The individual does not have to be the homeowner to claim the tax credit; renters are eligible if they are the clean energy project owner and entirely or partially contributed to the cost.

When the credit is available: The 25D credit is available for purchases on or after January 1, 2023, through 2035.

How to claim the credit: You may claim the credit when you file your tax return by submitting Form 5695. You must claim the credit for the tax year when the project is installed, not purchased. The value of the credit will be reduced from the amount of taxes you owe. The credit is not refundable, so the credit amount you receive can’t exceed the amount you owe in taxes.

Visit the federal website here for more details on what qualifies and how to use the credit.

What qualifies: This is a performance-based rebate for home improvements that result in a specified amount of energy savings. The value of the rebate varies by the amount of energy savings.

Incentive value: Your state energy office can pick one or both of the credit value structures in the chart below, either modeled or measured, to set the credit value.

^I Low-Income is defined in legislative text as a household at 80% or below area median income (AMI).
ⁱⁱ Multifamily low-income is defined as a multifamily building where 50%+ of the dwelling units are occupied by households at 80% or below AMI.
ⁱⁱⁱ Modeled performance requires the use of a BPI-2400 compliant energy modeling software to generate a base and proposed retrofit energy model that is calibrated to historical energy usage.
^iv Measured performance rebates require the use of an approved open-source measurement and verification (M&V) software, such as OpenEE Meter. The measured performance approach does not technically require an energy model since the actual consumption pre- and post-retrofit is used to calculate rebates.
^v Savings rate calculation: $2,000/(average home or multifamily building energy usage in kWh * 0.2); Low-income savings rate: $4,000/(average home or multifamily building energy usage in kWh * 0.2).

There is also a $200 per unit credit for contractors who complete a home efficiency rebate in state-defined disadvantaged communities.

This can be used with other federal incentives depending on the project to lower costs even more. See if your project also qualifies for the Residential Clean Energy Credit 25D or Energy Efficient Home Improvement Credit 25C.

If the modeled approach is used, this rebate can be stacked with the Home Electrification and Appliance Rebate for the same household retrofit project but can never be stacked for the same efficiency or electrification measure. If your state uses a measured approach, the credit cannot be stacked with the Home Electrification and Appliance Rebate.

Who is eligible: Homeowners, renters, and owners of renter-occupied single and multi-family buildings.

When the credit is available: The credit is implemented by your respective State government, and they are aiming to start issuing rebates in 2024 through September 30, 2031.

How to claim the credit: Instructions will be provided by your state energy office.

What qualifies: This is a point-of-sale rebate for qualified electrification projects in low- and moderate-income and historically underserved households.

Qualified projects include:

• Weatherization, including insulation, air sealing, or ventilation
• Energy Star certified electric heat pumps for space heating and cooling
• Energy Star certified heat pump water heaters
• Energy Star heat pump clothing dryers
• Energy Star electric kitchen equipment including electric and induction stove cooktop, ranges, or ovens
• Electrical panels and breaker boxes
• Electrical wiring

Incentive value: 100% of electrification project costs, up to $14,000, for low-income households, and 50% of costs, up to $14,000, for moderate-income households. There is a $500 incentive for project contractors per electrification project. Limits for specific upgrade components are as follows:

• Up to $1,600 for weatherization including insulation, air sealing, or ventilation
• Up to $8,000 for Energy Star certified electric heat pumps for space heating and cooling
• Up to $1,750 for Energy Star certified heat pump water heaters
• Up to $840 for Energy Star heat pump clothing dryers
• Up to $840 for Energy Star electric kitchen equipment
• Up to $4,000 for electric breaker boxes
• Up to $2,500 for electric wiring

This can be used with other federal incentives depending on the project to lower costs even more. See if your project also qualifies for the Residential Clean Energy Credit 25D, Energy Efficient Home Improvement Credit 25C, and Home Efficiency Rebate. This rebate can be stacked with the Home Efficiency Rebate if it uses the modeled approach, not the measured approach, for the same household retrofit project but can never be stacked for the same efficiency or electrification measure.

Who is eligible:

Low-income households defined as households making less than 80% of the area median income

Moderate-income households defined as households making between 80% and 150% of the area median income

Homeowners and landlords are eligible for this rebate. Use the Rewiring America calculator to input your information to find out if you qualify.

When the credit is available: The credit is implemented by state energy offices, many are hoping to start issuing rebates in 2025 through September 30, 2031. Find the status of your state energy office’s rebates here.

How to claim the credit: Instructions will be provided by your state energy office.

Stacking Rules

When government incentives are stacked, different program requirements must be considered and can impact the value of each credit. The federal government has published the following guidance on stacking tax credits and rebates. Check income eligibility and performance requirements as they can impact what can stack together.

Tax Credit Stacking

Generally, tax credits for homes, which include the Energy Efficient Home Improvement Credit 25C and Residential Clean Energy Property Credit 25D, can be combined with other incentives. Rebates and utility incentives must be applied before the 25C and 25D tax credits, must be incorporated into tax form paperwork, and could impact the value of the credit. Other federal and non-rebate state incentives do not impact the value of the credit.

Utility incentives: Generally, if a utility provides a subsidy to a customer for the purchase or installation of any energy conservation measure, the taxpayer must claim the cost of the qualifying purchase minus the utility subsidy on the tax form. Net metering compensation is not considered a subsidy.

Rebates: Regardless of the program administrator, rebates generally follow similar rules to utility incentives. If a rebate is provided for an energy conservation measure, the taxpayer must claim the cost of the qualifying purchase minus the rebate on the tax form. This applies for rebates provided to the household, manufacturer, distributor, or seller/installer. Federal, state, and local rebates all qualify under these rules.

State energy efficiency incentives: A taxpayer does not need to reduce the cost of their qualifying purchase on a tax form if the state incentive is not a rebate. While many states label their energy efficiency incentives as “rebates,” these incentives may not qualify as rebates or purchase-price adjustments under federal income tax law and could be included in the taxpayer’s gross income for federal income tax purposes. In general, rebates are nontaxable purchase price reductions if they are based on or related to the cost of the property, received from someone having a reasonable connection to the sale of the property (for example, the manufacturer, distributor, or seller/installer), and do not represent payment or compensation for services provided by the taxpayer.

Rebate Stacking

The Home Efficiency Rebates (HER) and Home Electrification and Appliance Rebates (HEAR) are the two main federal rebates for home improvement projects.

Combining Federal Rebates (HER & HEAR): The HEAR and HER rebates can be stacked for the same household retrofit project but cannot be stacked for the same efficiency or electrification measure. There are additional restrictions for retrofit projects pursuing the measured savings pathway for HER:

• Only HEAR rebates for electric panel and wiring upgrades can be accessed by an address that is in the process of receiving a HER rebate using the measured savings approach.
• A household in the process of receiving a HEAR rebate associated with an energy-savings product like a heat pump cannot simultaneously receive a HER rebate using the measured savings approach (or vice versa).

Non-federal funds: Non-federal funds (i.e., state or local funding, utility programs, or philanthropic funds) can stack with the IRA rebates when those state, local, utility, and philanthropic program requirements do not have additional stacking restrictions.

Federal tax credits: The federal Energy Efficient Home Improvement Tax Credit 25C can stack with rebates. The credit is based on the cost of the applicable product after applying rebate funds.

Use the graphic provided by the Department of Energy below to understand how HER and HEAR can be combined with other incentives.

Source: U.S. Department of Energy

Stacking Example

The following is an example of how federal, state, and utility incentives stack. Please research your own local, utility, and state incentives to find programs you may be eligible for.

What qualifies: The 30D tax credit can be used if you buy a qualified new electric vehicle (EV) or fuel cell vehicle (FCV) from a licensed dealer (those interested in leasing should see the Qualified Commercial Clean Vehicle Tax Credit 45W).

The vehicle manufacturer’s suggested retail price can’t exceed $80,000 for vans, sport utility vehicles, and pickup trucks and $55,000 for all other vehicles. There are restrictions around vehicles’ technical and manufacturing specifications. See what models qualify here. If the model you are interested in does not qualify, you may be able to lease the vehicle and take advantage of the 45W tax credit through your dealership.

Incentive value: The credit is either $3,750 or $7,500 depending on manufacturing specifications. See what models qualify here.

Who is eligible:

To qualify, you must:

• Buy the vehicle for your own use, not resale
• Use the vehicle primarily in the United States

In addition, your modified adjusted gross income (AGI) may not exceed:

• $300,000 for married filing jointly or a surviving spouse
• $225,000 for heads of households
• $150,000 for all other filers

When the credit is available: The 30D credit is available for purchases on or after January 1, 2023, through 2032.

How to claim the credit:

You may claim the credit when you file your tax return, or you can transfer your credit to a registered dealer at the time of sale to reduce the amount you pay during purchase.

• Check to see if the vehicle you are interested in purchasing qualifies.
• Purchase your vehicle.
• Get a paper copy of the time-of-sale report when you complete your purchase from the dealer.
• You can claim the credit two ways: on your own taxes or by transferring it to a dealer.
• To claim the credit when you file your taxes, submit Form 8936 when you file your tax return for the year in which you take delivery of the vehicle.
• You can also transfer the credit to the dealer when you purchase the vehicle to claim the incentive right away and get a reduction off the purchase price. To do so, follow the dealership’s instructions.

Visit the federal website here for more details on what qualifies and how to use the credit.

What qualifies: The 25E tax credit can be used if you buy a qualified used electric vehicle (EV) or fuel cell vehicle (FCV) from a licensed dealer for $25,000 or less. The vehicle must be over two years old, previously not have been resold after August 16, 2022, and meet other technical criteria.

Incentive value: The credit equals 30% of the sale price up to a maximum credit of $4,000.

Who is eligible:

To qualify, you must:

• Be an individual who bought the vehicle for use and not for resale
• Not be the original owner
• Not be claimed as a dependent on another person’s tax return
• Not have claimed another used clean vehicle credit in the 3 years before the purchase date

In addition, your modified adjusted gross income (AGI) may not exceed:

• $150,000 for married filing jointly or a surviving spouse
• $112,500 for heads of households
• $75,000 for all other filers

When the credit is available: The 25E credit is available for purchases on or after January 1, 2023, through 2032.

How to claim the credit:

You may claim the credit when you file your tax return, or you can transfer your credit to a registered dealer at the time of sale to reduce the amount you pay during purchase.

• Check to see if the vehicle you are interested in purchasing qualifies.
• Purchase your vehicle.
• Get a paper copy of the time-of-sale report when you complete your purchase from the dealer.
• You can claim the credit two ways: on your own taxes or by transferring it to a dealer
• To claim the credit when you file your taxes, submit Form 8936 when you file your tax return for the year in which you take delivery of the vehicle.
• You can also transfer the credit to the dealer when you purchase the vehicle to claim the incentive right away and get a reduction off the purchase price. To do so, follow the dealership’s instructions.

Visit the federal website here for more details on what qualifies and how to use the credit.

If you are interested in leasing an electric vehicle, speak to your dealership about getting up to $7,500 off your qualified clean vehicle lease.

As leased vehicles are owned by the dealership, dealers can purchase clean vehicles and receive the Qualified Commercial Clean Vehicle Tax Credit 45W to get up to $7,500 tax credit per vehicle. Dealers can pass these savings onto individuals who lease these vehicles.

The Clean Vehicle Tax Credit 30D has restrictions that limit the eligibility of many vehicles. However, 45W has fewer restrictions. A vehicle that may not qualify for 30D may qualify for the 45W credit, and if leasing is a desirable option, you may save money by leasing.

What qualifies: The 30C tax credit can be used to install qualified vehicle refueling and recharging equipment for electricity, ethanol, natural gas, hydrogen, and biodiesel vehicles. Eligibility includes bidirectional charging and charging for 2- and 3-wheel vehicles.

The credit may only be used for your primary residence, which must be in an eligible census tract.

To qualify, your project must meet the following criteria:

• Equipment must be new or be used for the first time, not used. The credit can only be claimed on the “original installation” of the equipment.
• The refueling station must be located at a primary residence in the United States.

This credit can also be used as a business but follows different rules.

Incentive value: The tax credit equals 30% of the cost with a maximum amount of $1,000 per item.

Eligible expenses include:

• Charging equipment costs
• Installation costs

Who is eligible: To qualify, you must have a primary residence within one of the US Department of Treasury-identified eligible locations.

When the credit is available: The 30C credit is available for purchases made on or after December 31, 2022, through 2032. You are eligible for the credit in the year the equipment becomes operational.

How to claim the credit:

• Check the 30C eligible location map to confirm your home is eligible.
• Use Form 8911 to figure out and report your credit for an alternative fuel vehicle refueling project for the tax year when the alternative fuel recharging project is operational.

Visit the federal website here for more details on what qualifies and how to use the credit.