Federal tax credits for solar and heat pumps ended in 2025: details

If a quote or an old article says the federal government will cover 30 percent of your solar panels or heat pump, check the date. Both main federal home energy credits ended after December 31, 2025. Public Law 119-21, signed July 4, 2025, and commonly called the One, Big, Beautiful Bill, moved up their end dates. This is what the IRS says, as checked in October 2026.

Residential Clean Energy Credit (section 25D). This credit equaled 30 percent of the cost of new solar panels, solar water heaters, small wind turbines, geothermal heat pumps, fuel cells, and, beginning in 2023, battery storage with at least 3 kilowatt-hours of capacity. The IRS says the credit is not allowed for any expenditures made after December 31, 2025.

The timing rule matters. The IRS treats an expenditure as made when the original installation of the item is completed. So a system you paid for in 2025 but that was finished in 2026 does not qualify. For new construction, the expenditure counts as made when you begin using the home.

Energy Efficient Home Improvement Credit (section 25C). This credit covered 30 percent of qualified costs for things like heat pumps, heat pump water heaters, insulation, windows and doors. The yearly limit was $1,200, with a separate $2,000 limit for qualified heat pumps, heat pump water heaters and biomass stoves or boilers. The IRS says the credit is not allowed for any property placed in service after December 31, 2025. For 2025, the item also had to come from a qualified manufacturer, and you had to report its Qualified Manufacturer Identification Number.

For example, a homeowner who had a $6,000 heat pump water heater installed in 2025 could have claimed 30 percent, or $1,800, which is under the $2,000 cap. The same project finished in 2026 earns no federal credit.

What still matters if you installed earlier. Both credits were claimed on IRS Form 5695 for the tax year the property was installed. If your 25D credit was larger than the tax you owed, the IRS says you can carry the unused amount forward to reduce tax in future years. That carryforward did not disappear with the credit, so it may still be on your 2026 return.

State and utility rebates are separate from federal credits and change on their own schedules. Ask your utility, or a program such as TECH Clean California, what is open today. This is general information; a tax professional can tell you how these rules apply to your return.

Today's next step: look back at any 2025 or earlier Form 5695 you filed and check whether it shows an unused credit carried forward.