If you’ve heard about a federal tax credit for insulation, new windows, a heat pump, or a home energy audit, you may be wondering if it’s still available in 2026. The short answer: the Energy Efficient Home Improvement Credit, also known as the 25C credit, changed significantly under the One Big Beautiful Bill Act (OBBBA). Here’s what homeowners need to know before filing this year — and before planning any new upgrades.

1. What the Energy Efficient Home Improvement Credit (25C) Covered

For several years, the 25C credit helped homeowners offset the cost of energy-saving upgrades to an existing home. Eligible improvements generally included:

• Insulation and air-sealing materials
• Exterior doors, windows, and skylights
• Central air conditioners
• Water heaters, furnaces, and boilers that meet efficiency requirements
• Heat pumps and heat pump water heaters
• Biomass stoves and boilers
• Home energy audits

The credit came with annual dollar limits rather than a single lifetime cap:

• A $1,200 general annual limit, with smaller sub-caps within that total for items like exterior doors, windows, and home energy audits
• A separate $2,000 annual limit specifically for qualifying heat pumps, heat pump water heaters, and biomass stoves or boilers

Because these were annual limits, homeowners could claim the credit again each tax year they made qualifying purchases — there was no lifetime maximum. That was true through the 2025 tax year.

2. What Changed Under OBBBA for 2026

The One Big Beautiful Bill Act made a direct change to this credit. Under OBBBA Section 70505, the Energy Efficient Home Improvement Credit is terminated for property placed in service after December 31, 2025.

This is important to understand clearly: the law did not reduce the credit, phase it down gradually, or replace it with a smaller version. It ended the credit outright starting in 2026. If your qualifying home improvement is placed in service on or after January 1, 2026, the 25C credit is not available for it under current law.

3. Can You Still Claim It for 2025 Work?

Yes — if the timing works out. The key detail the IRS uses is not when you purchased the materials or signed a contract, but when the improvement was placed in service. In practical terms, that means the equipment was installed and ready for its intended use.

If your qualifying improvement was placed in service on or before December 31, 2025, you can still claim the 25C credit by filing Form 5695, Residential Energy Credits, with your 2025 federal tax return, which most homeowners will file during the 2026 filing season.

A few practical reminders:

• Keep your receipts, invoices, and the manufacturer’s certification statement showing the product met the required efficiency standards
• Note the exact installation completion date, since that determines eligibility, not the purchase date
• If you’re unsure whether your specific product qualifies, the manufacturer’s documentation or the IRS instructions for Form 5695 are the best places to check

4. What This Means If You’re Planning Home Upgrades in 2026

If you’re considering insulation, a new heat pump, energy-efficient windows, or a home energy audit in 2026, it’s important to go in with accurate expectations: under current law, there is no federal 25C credit for improvements placed in service in 2026 or later.

That doesn’t necessarily mean there’s no financial help available. It’s worth checking whether any of the following still apply in your area:

• State-level energy efficiency tax credits or rebates
• Utility company rebate programs for insulation, heat pumps, or efficient appliances
• Remaining Department of Energy (DOE) rebate programs, where available, which are separate from the federal 25C tax credit
• Local or regional incentive programs administered by your state energy office

Because these programs vary by state and change over time, check directly with your state energy office, your utility provider, or DOE.gov for the most current options before starting a project.

5. Frequently Asked Questions

Does this also affect the Residential Clean Energy Credit (25D) for solar?
The 25C credit covered here (insulation, windows, heat pumps, audits, etc.) is a separate program from the Residential Clean Energy Credit (Section 25D), which applies to solar panels, solar water heating, and similar renewable energy property. Because these are two distinct credits with their own rules and timelines, don’t assume the OBBBA change to 25C automatically applies the same way to 25D. If solar or another renewable energy purchase is part of your plans, confirm the current status of the 25D credit directly on IRS.gov before relying on it, since guidance can be updated.

What if I signed a contract in 2025 but the installation finishes in 2026?
Based on how the IRS has defined “placed in service” for this credit, what typically matters is the date the equipment is installed and ready for use — not the date of the contract or purchase. If installation isn’t completed until 2026, the improvement may fall outside the credit’s eligibility window under the OBBBA termination. If your project spans the end of 2025 into 2026, it’s worth confirming the specific placed-in-service date with your contractor and, if you have questions about how it applies to your situation, checking the IRS instructions for Form 5695 or speaking with a tax professional.

6. The Bottom Line for 2026 Filers

The Energy Efficient Home Improvement Credit was a useful annual benefit for homeowners investing in insulation, windows, heat pumps, and similar upgrades — but OBBBA closed it out for anything placed in service after December 31, 2025. If you completed qualifying work in 2025, don’t leave that credit on the table: file Form 5695 with your 2025 return and keep your documentation handy. If you’re planning upgrades for 2026 and beyond, shift your research toward state, utility, and DOE rebate programs, since the federal 25C credit is no longer part of the picture under current law.

This article is for general informational purposes and reflects publicly available guidance as of publication. Tax rules and IRS guidance for 2026 can change — for guidance specific to your situation, consult a qualified tax professional or the official IRS instructions for Form 5695 on IRS.gov.