Homeowners need to act quickly to meet the new termination dates for energy credits.
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Still have questions about the One Big Beautiful Bill Act (OBBBA)? It’s no wonder. Misinformation, mixed with good old-fashioned confusion, was circulating even before President Donald Trump signed the bill into law on Thursday, July 4, 2025.
Our Forbes team continues to comb through the new law to provide the information you need (or want) to know about the individual tax cuts. You can take a peek at some of the most popular questions that I’ve received on social media, via email, and in a Reddit Ask Me Anything session—you’ll find those answers here.
Last month, the IRS issued guidance with respect to new provisions that take effect for 2025. You can find that guidance and quick summaries about no tax on tips, no tax on overtime, and no tax on Social Security (all of which are actually new, temporary deductions) here.
Now, the IRS has issued guidance about the energy credits and deductions that are set to expire under OBBBA. Here’s what you need to know.
General Provisions
OBBBA eliminated most individual credits for clean energy, including the clean vehicle credits for cars, the energy-efficient home improvement credit, the residential clean energy credit, and the new energy-efficient home credit.
Expiring energy credits and deductions under the One Big Beautiful Bill Act (OBBBA).
Kelly Phillips Erb
Energy Efficient Home Improvement Credit
The credit equals 30% of certain qualified expenses, including qualified energy efficiency improvements installed during the taxable year, residential energy property, and home energy audits.
The maximum credit you can claim each year is $1,200 for energy efficient property costs and certain energy efficient home improvements, with limits on exterior doors ($250 per door and $500 total), exterior windows and skylights ($600) and home energy audits ($150) and $2,000 per year for qualified heat pumps, water heaters, biomass stoves or biomass boilers. The credit has no lifetime dollar limit and is nonrefundable, so you can’t get back more on the credit than you owe in taxes. You can’t apply any excess credit to future tax years.
Previously: If you make qualified energy-efficient improvements to your home after January 1, 2023, you may qualify for a tax credit up to $3,200. You can claim the credit for improvements made through 2032.
Now: The credit will not be allowed for any property placed in service after December 31, 2025.
Residential Clean Energy Credit
If you invest in renewable energy for your home, such as solar, wind, geothermal, fuel cells, or battery storage technology, you may qualify for an annual residential clean energy tax credit. The credit equals 30% of the costs of new, qualified clean energy property for your home.
The credit is nonrefundable, so the credit amount you receive can’t exceed the amount you owe in tax. You can carry forward any excess unused credit, though, and apply it to reduce the tax you owe in future years. The credit has no annual or lifetime dollar limit except for credit limits for fuel cell property. You can claim the annual credit every year that you install eligible property until the credit begins to phase out.
Previously: The credit was available for installations made between 2022 and 2032.
Now: The credit will not be allowed for any expenditures made after December 31, 2025. The IRS has confirmed that if installation is completed after December 31, 2025, you cannot claim the credit—that’s true even if full payment has already been made. In the case of an expenditure made for the construction or reconstruction of a structure, the expenditure is considered made when your original use of the constructed or reconstructed structure begins. If the construction or reconstruction is finished and your initial use of the structure starts after December 31, 2025, the expenditure is deemed made after that date, which will prevent you from claiming the credit.
Previously-owned Clean Vehicles Credit
If you buy a qualified used electric vehicle (EV) or fuel cell vehicle (FCV) from a licensed dealer for $25,000 or less, you may be eligible for a used clean vehicle tax credit. The credit equals 30% of the sale price up to a maximum credit of $4,000. It is nonrefundable, so you can’t get back more on the credit than you owe in taxes. You can’t apply any excess credit to future tax years.
Previously: Purchases made before 2023 don’t qualify.
Now: The credit will not be allowed with respect to any vehicle acquired after September 30, 2025. A vehicle is “acquired” as of the date a written binding contract is entered into and a payment has been made. A payment includes a nominal down payment or a vehicle trade-in.
Acquisition alone does not immediately entitle you to a credit. The vehicle must be “placed in service” to claim the credit. If you acquires a vehicle by having a written binding contract in place and a payment made on or before September 30, 2025, then you will be entitled to claim the credit when you place the vehicle in service (when you take possession of the vehicle), even if the vehicle is placed in service after September 30, 2025. You should receive a time-of-sale report from the dealer at the time you take possession or within three days of taking possession of the vehicle.
Alternative Fuel Vehicle Refueling Property Credit
If you install property to store or dispense clean-burning fuel or recharge electric vehicles in your home or business, you may be eligible for the Alternative Fuel Vehicle Refueling Property Tax Credit. The property must be installed in a qualifying location.
Previously: The credit allowed is based on the placed-in-service date for the refueling property. It was extended and modified by the Inflation Reduction Act (IRA).
Now: The credit will not be allowed for any property placed in service after June 30, 2026.
New Clean Vehicle Credit
If you place in service a new plug-in electric vehicle (EV) or fuel cell vehicle (FCV), you may qualify for a clean vehicle tax credit. At the time of sale, a seller must give you information about your vehicle’s qualifications. Sellers must also register online and report the same information to the IRS. If they don’t, your vehicle won’t be eligible for the credit.
Previously: The credit applies to vehicles placed in service in 2023 or after.
Now: The credit will not be allowed for any vehicle acquired after September 30, 2025. A vehicle is “acquired” as of the date a written binding contract is entered into and a payment has been made—a payment includes a nominal down payment or a vehicle trade-in.
New user registration for the Clean Vehicle Credit program through the Energy Credits Online portal will close on September 30, 2025. The portal will remain open beyond September 30, 2025, for limited use by previously registered users to submit time of sale reports and updates to such reports, such as when a vehicle has been returned.
Acquisition alone does not immediately entitle you to a credit. You should wait until the time of the sale to make the credit transfer election. The election to transfer the credit generally occurs at the time of sale, which is when you take possession.
New Energy Efficient Home Credit
Eligible contractors who build or substantially reconstruct qualified new energy-efficient homes may be able to claim tax credits up to $5,000 per home. The amount of the credit depends on factors including the type of home, its energy efficiency, and the date when the home is acquired.
Previously: For homes acquired in 2023 through 2032, the credit amount is up to $5,000 based on the applicable program and program requirements under which the home was built. For homes acquired before 2023, the credit amount is $1,000 or $2,000, depending on the energy-saving requirements met.
Now: The credit will not be allowed for any qualified new energy-efficient home acquired after June 30, 2026. Additionally, because of the accelerated termination of the credit, periodic written reports, including reporting for property placed in service before January 1, 2026, are no longer required. A manufacturer is still required to register with the IRS to become a qualified manufacturer for its specified property to be eligible for the credit.
Qualified Commercial Clean Vehicle
Businesses and tax-exempt organizations that buy a qualified commercial clean vehicle may qualify for a clean vehicle tax credit of up to $40,000. There is no limit on the number of credits your business can claim. For businesses, the credits are nonrefundable, so you can’t get back more on the credit than you owe in taxes.
Previously: You can claim the credit for purchasing and placing a qualified commercial clean vehicle in service during the taxable year.
Now: The credit will not be allowed for any vehicle acquired after September 30, 2025.
A vehicle is “acquired” as of the date a written binding contract is entered into and a payment has been made—a payment includes a nominal down payment or a vehicle trade-in.
Acquisition alone does not immediately entitle you to a credit. The vehicle must be “placed in service” to claim the credit. If you acquire a vehicle by having a written binding contract in place and a payment is made on or before September 30, 2025, then you will be entitled to claim the credit when you place the vehicle in service (when you take possession of the vehicle), even if the vehicle is placed in service after September 30, 2025. You should receive a time-of-sale report from the dealer at the time you take possession or within three days of taking possession of the vehicle.
Energy Efficient Commercial Buildings Deduction
Building owners who place in service energy-efficient commercial building property (EECBP) or energy-efficient commercial building retrofit property (EEBRP) may be able to claim a tax deduction. An increased deduction may be available for increased energy savings or meeting prevailing wage and apprenticeship requirements.
Previously: The deduction was expanded under the Inflation Reduction Act of 2022.
Now: The deduction will not be allowed with respect to any property the construction of which begins after June 30, 2026.
What’s Next?
You can find the IRS fact sheet here.
There’s just one more thing you need to know. Guidance found on the IRS website isn’t to be treated as gospel. Specifically, as the IRS has reminded us time and again, FAQs and other information on the IRS website are not included in the Internal Revenue Bulletin (IRB) and can’t be relied upon as legal authority. This means that the information cannot be used to support a legal argument in a court case. Only guidance that is published in the IRB has precedential value (as a reminder, you can find links to the most recent IRB postings in our free weekly tax newsletter).
Keep checking with our Forbes team for more information.
