If you make qualifying energy-efficient improvements to your home after January 1, 2023, you may be eligible for a tax credit of up to $3,200. You can claim the credit for improvements made through 2032.
For improvements installed in 2022 or earlier: Use the prior year version of Form 5695.
Beginning January 1, 2023, the credit equals 30% of certain qualified expenses, including:
- Qualified energy efficiency improvements installed during the tax year
- Residential energy property expenditures
- Home energy audits
There are annual limits on the credit amount and the amount of credit allowed for certain types of qualified expenses. The credit applies to eligible property placed in service between January 1, 2023, and January 1, 2033.
The maximum credit you can claim each year is:
- $1,200 for energy property costs and certain energy-efficient home improvements, with limits on doors ($250 per door, up to $500), windows and skylights ($600), and home energy audits ($150)
- $2,000 annually for eligible heat pumps, water heaters, biomass stoves, and biomass boilers
There is no lifetime limit for this credit. You can claim the maximum annual credit amount each year through 2033 for qualifying improvements or installations. However, starting in 2025, for each eligible property placed in service, no credit is allowed unless the property is produced by a qualified manufacturer and the taxpayer reports the property's identification number on their tax return.
The credit is nonrefundable, so you cannot get back more than you owe in taxes. You cannot carry over any excess credit to future tax years.
Who is eligible for the credit
You can claim the Energy Efficient Home Improvement Credit for improvements made to your main home. Your main home is generally where you live most of the time.
For the Energy Efficient Home Improvement Credit, the home must be:
- Located in the United States
- An existing home that you are improving or adding onto, not a new home
In most cases, the home must be your main home (where you live most of the year). If you are a landlord or other property owner who does not live in the home, you cannot claim the credit.
Home used for business
If you use an item of property solely for business purposes, you cannot claim the credit.
If you use your home partly for business, the credit for qualified clean energy expenses is:
- If business use is 20% or less of the home: Full credit
- If business use is more than 20% of the home: Credit based on the portion of expenses allocated to non-business use
Eligible Expenses and Credit Amounts
To be eligible, home improvements must meet energy efficiency standards. They must be new systems and materials, not used. Below are specific credit limits for certain improvements.
Building Envelope Components
To be eligible, building envelope components must have an expected lifespan of at least 5 years. Eligible components include new:
- Exterior doors that meet applicable Energy Star requirements. The credit is limited to $250 per door, up to a total of $500.
- Exterior windows and skylights that meet Energy Star's Most Efficient certification requirements. The credit is limited to a total of $600.
- Insulation and air sealing materials or systems that meet the International Energy Conservation Code (IECC) standard in effect at the beginning of the calendar year two years prior to the calendar year the property is placed in service. For example, materials or systems installed in 2025 must meet the IECC standard effective January 1, 2023. These items have no specific credit limit beyond the overall maximum credit of $1,200. Insulation and air sealing materials or systems are the only type of property eligible for the credit without needing to meet qualified manufacturer and product identification number requirements.
Labor costs for installing building envelope components are not eligible for this credit.
Home Energy Audits
A tax credit of up to $150 is available for a home energy audit of your main home.
To qualify, the home energy audit must:
- Include a written report and inspection that identifies the most significant and cost-effective energy efficiency improvements for the home, including estimates of energy and cost savings from such improvements, and
- Be conducted and prepared by a home energy auditor.
Beginning in 2024, the following additional requirements must be met:
- The inspection must be conducted by a qualified home energy auditor, defined as someone who, at the time of the audit, holds a certification from one of the qualified certification programs listed in the U.S. Department of Energy Recognized Home Energy Auditor Qualified Certification Programs for the Energy Efficient Home Improvement Credit (Section 25C), or performs the audit under the supervision of a qualified home energy auditor;
- The written report must be prepared and signed by a qualified home energy auditor, adhere to industry best practices, and include:
- The name of the qualified home energy auditor and the relevant Employer Identification Number (EIN), or if the auditor does not have an EIN, another appropriate taxpayer identification number;
- Proof of certification from the qualified certification program that the auditor has completed; and
- The name of the qualified certification program.
We recommend that home energy auditors who do not yet have an EIN apply for and obtain one. Apply for an EIN online.
For more information, see Notice 2023-59.
Residential Energy Property
Residential energy property that meets or exceeds the highest efficiency tier (excluding any advanced tiers) of the Consortium for Energy Efficiency (CEE) standards qualifies for a credit of up to $600 per item when installed from the beginning of the year. Eligible costs may include labor for installation.
Qualifying equipment includes new:
- Central air conditioners
- Natural gas, propane, or oil water heaters
- Natural gas, propane, or oil furnaces and hot water boilers
Oil furnaces or hot water boilers may also qualify through other efficiency standards.
Electrical components necessary to support residential energy property, including distribution panels, subpanels, branch circuits, and feeders, also qualify for the credit if they meet the National Electrical Code and have a capacity of 200 amps or higher. The tax credit limit is $600 per item.
Energy Property – Heat Pumps and Biomass Stoves and Boilers
Heat pumps and biomass stoves and boilers that meet or exceed the highest efficiency tier (excluding any advanced tiers) of the Consortium for Energy Efficiency (CEE) standards, with a thermal efficiency rating of at least 75% when installed from the beginning of the year, qualify for a credit of up to $2,000 annually. Eligible costs may include labor for installation.
Qualifying equipment includes new:
- Electric or natural gas heat pumps
- Electric or natural gas heat pump water heaters
- Biomass stoves and boilers
Subsidies, Rebates, and Incentives
When calculating your credit, you may need to subtract subsidies, rebates, or other financial incentives from your eligible equipment costs, as they are considered adjustments to the purchase price.
Subsidies provided by utility companies for purchasing or installing clean energy equipment will be deducted from eligible expenses. This applies whether the subsidy is paid directly to you or on your behalf to the contractor. However, payments from utility companies for clean energy you sell back to the grid, such as net metering credits, do not affect your eligible expenses.
Rebates will be deducted from eligible expenses if all of the following apply:
- The rebate is based on the cost of the equipment
- The rebate comes from someone involved in the sale, such as the manufacturer, distributor, seller, or installer
- The rebate is not given as compensation for services you provide
State energy efficiency incentives are generally not deducted from eligible expenses unless they qualify as a rebate or purchase price adjustment under federal income tax regulations. Many states label energy efficiency incentives as rebates even if they do not meet that definition. For federal income tax purposes, these incentives may be included in your gross income. Refer to Notice 2013-70, IRB 2013-47 (English).
IRS Announcement 2024-19 (English) provides taxpayers with specific information regarding tax payments related to the U.S. Department of Energy's Home Energy Rebate Programs. Visit the Office of State and Community Energy Programs (English) for more information on home energy rebates.
How to Claim the Energy Efficient Home Improvement Credit
Submit Form 5695, Residential Energy Credits (English), Part II, along with your tax return to claim the credit. You must claim the credit for the tax year in which the equipment was installed; merely purchasing the equipment is not sufficient.
For additional instructions on how to claim the credit, follow our step-by-step guide:
- Energy Efficient Home Improvements (English)
- Home Energy Audit (English)
- Residential Energy Property (English)
Related Items
- Residential Clean Energy Credit
- Publication 5886-A, Personal Clean Energy Tax Incentives (English) PDF
- Publication 5967, Energy Efficient Home Improvement Credit (25C) (English) PDF
- Publication 5976, How to Claim the Energy Efficient Home Improvement Credit – Residential Energy Property (English) PDF
- Publication 5978, How to Claim the Energy Efficient Home Improvement Credit – Home Energy Audit (English) PDF
- Publication 5979, How to Claim the Energy Efficient Home Improvement Credit – Exterior Doors, Windows, Skylights, and Insulation (English) PDF