Impact of the One Beautiful Bill Act on Residential Energy Credits
July 24, 2025
By Steph Noll
Tax Supervisor
The One Beautiful Bill Act (OBBB) introduces significant changes to residential energy tax credits, specifically affecting the energy efficient home improvement credit (25C) and the residential clean energy credit (25D). Originally scheduled to expire in 2032, both credits will now sunset on Dec. 31, 2025.
The energy efficient home improvement credit (25C) covers 30% of qualifying costs for upgrades such as heat pumps, HVAC systems, insulation, windows, doors and energy audits. Annual limits apply, including a $1,200 cap for most improvements and $2,000 for heat pumps.
The residential clean energy credit (25D) offers 30% credit for clean energy systems including solar panels, geothermal heat pumps, battery storage and small wind turbines. This credit has no annual cap and allows carryforward of unused amounts.
Homeowners planning energy-efficient upgrades or renewable energy installations must complete and place into service such projects by Dec. 31, 2025, to benefit from these federal incentives. For personalized guidance on qualifying improvements and how to maximize available credits, please contact us.
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