For 2025, the main U.S. federal energy tax credits for homeowners include the Residential Clean Energy Credit (30% for solar, wind, geothermal, battery storage, etc.) and the Energy Efficient Home Improvement Credit (30% of costs for windows, heat pumps, efficient furnaces, etc., up to $3,200 total annually), both ending December 31, 2025. Key changes for 2025 involve the need for a Manufacturer ID Number (QMID) for some home efficiency products and higher efficiency standards for central ACs.
For 2025, homeowners can claim federal tax credits for energy-efficient home improvements, offering up to $3,200 annually, with 30% of costs covered for upgrades like insulation, windows, doors, qualifying HVAC, water heaters, and energy audits, capped at specific limits per item, alongside the Residential Clean Energy Credit (30% for solar, etc.) ending Dec 31, 2025, requiring IRS Form 5695 and product PINs for certain items.
The standard deduction increased for 2025 and 2026, and a new temporary “bonus” deduction for adults 65 and older begins in 2025. The child tax credit increased to $2,200 for the 2025 and 2026 tax years; retirement plan contribution limits for IRAs and 401(k)s also increased for 2026.
Beginning January 1, 2023, the credit becomes equal to the lesser of 30% of the sum of amounts paid for qualifying home improvements or the annual $1,200 credit limit. In addition, to the aggregate $1,200 limit, annual dollar credit limits apply to specific items including: home energy audits: $150.
You may be eligible for a California Earned Income Tax Credit (CalEITC) up to $3,756 for tax year 2025 as a working family or individual earning up to $32,900 per year. You must claim the credit on the 2025 FTB 3514 form, California Earned Income Tax Credit, or if you e-file follow your software's instructions.
To qualify for a tax credit of up to $7,500, a new EV or an eligible plug-in hybrid electric vehicle (PHEV) must have met certain rules: A vehicle's MSRP must not have exceeded certain limits, so pricey EVs like the GMC Hummer EV, Lucid Air, and Tesla Model S didn't qualify.
A recent tax law ("One Big Beautiful Bill") introduced a new $6,000 bonus deduction for Americans aged 65 and older, available for tax years 2025-2028, reducing taxable income, not the tax itself, with income phase-outs starting at $75,000 MAGI for singles and $150,000 for joint filers. This deduction adds to existing standard deductions, provides up to $12,000 for couples, and requires a Social Security number and filing status other than Married Filing Separately.
These Home Improvement Projects Are Tax Deductible
The credits have no lifetime dollar limits. Homeowners may claim the maximum annual credit every year that eligible improvements are made, through 2025. The credits are nonrefundable, so you cannot get back more on the credit than you owe in taxes. You may not apply any excess credit to future tax years.
Energy Efficient Home Improvement Credit
These expenses may qualify if they meet requirements detailed on energy.gov: Exterior doors, windows, skylights and insulation materials. Central air conditioners, water heaters, furnaces, boilers and heat pumps. Biomass stoves and boilers.
The Act accelerates the end of the following home and residential energy credits: Energy Efficient Home Improvement Credit (25C): Not allowed for any property placed in service after December 31, 2025. Residential Clean Energy Credit (25D): Not allowed for any expenditures made after December 31, 2025.
The IRS classifies installing a new roof as a home improvement and considers any costs associated with home improvements on your primary residence as non-deductible expenses. IRS considers a home improvement every project that adds to the value of your home, prolongs its useful life, or adapts it to new uses.
If you make qualified energy-efficient improvements to your home after Jan. 1, 2023, you may qualify for a tax credit up to $3,200. You can claim the credit for improvements made through December 31, 2025. For improvements installed in 2022 or earlier: Use previous versions of Form 5695.
Unlike business expenses, you can't simply write off a kitchen renovation or new flooring on your current tax return. However, this doesn't mean your improvements provide no tax benefit. They may impact your capital gains tax when selling the home.
What can I claim if I am over State Pension age or if I have a partner over State Pension age?
Taxpayers who are paying someone to take care of their children or another member of household while they work, may qualify for child and dependent care credit regardless of their income. For tax year 2021, the maximum eligible expense for this credit is $8,000 for one child and $16,000 for two or more.
The MAGI (modified adjusted gross income) limit is $75,000 ($150,000 for joint filers). If you make less than the limit, you may qualify for the full $6,000 deduction. The deduction starts phasing out by 6 cents for every dollar you're over the limit.