The clean energy clock is ticking: What we'll lose when key tax credits expire this year

The Fourth of July fireworks weren't just celebrating America's independence this year—they were also marking the beginning of the end for some of the most valuable home improvement tax credits in recent memory. President Trump signed HR1 (formerly known as the "One Big Beautiful Bill Act") into law on July 4, 2025, setting in motion a series of unfavorable changes that will significantly impact homeowners considering energy-efficient upgrades.

The legislation accelerates the termination of several consumer tax credits that were originally scheduled to last as long as another decade. For homeowners, this creates a compressed timeline to take advantage of substantial savings while making updates to their properties, transforming 2025 from a year of planning to a year of clean energy action.

For millions of American homeowners, the next few months represent their last opportunity to access these significant federal incentives. The window is rapidly closing—and once they’re gone, they could be gone for good.

The average American home has room for improvement when it comes to energy efficiency. From leaky windows that let conditioned air escape to aging HVAC systems that work overtime to maintain comfortable temperatures, most homes have real opportunities for improvement. Until now, federal tax credits have helped offset the cost of these upgrades, making them more accessible to lower-and middle-class homeowners looking to lower the cost of their utility bills.

The new bill ends the Energy Efficient Home Improvement Credit (Section 25C) after this year instead of 2032. It currently provides up to $3,200 annually for qualifying home improvements. 

Here's how much you stand to lose if you don't act this year:

Heat pump systems: Up to $2,000 in credits are ending

The Energy Efficient Home Improvement Credit provides a 30% tax credit for eligible heat pumps, capped at $2,000. Heat pumps represent one of the most effective home electrification upgrades, providing both heating and cooling while using substantially less energy than traditional systems such as a gas furnace.

Heat pumps that meet or exceed the Consortium for Energy Efficiency's (CEE) highest efficiency tier qualify for a credit up to $2,000 per year. For the typical installation costing around $15,000 to $30,000, this credit can reduce your out-of-pocket costs by thousands of dollars.

Modern heat pumps work efficiently even in cold climates, and homeowners with oil heating can often save hundreds or even thousands of dollars per year on energy bills by upgrading to high-efficiency HVAC systems. Without the tax credit, these systems become less affordable for American families.

Building envelope improvements: $1,200 in annual savings

Your home's "envelope"—its walls, windows, doors, and insulation—determines how much energy you need to heat and cool your living space. The 30% credit (capped by equipment type) covers insulation and air sealing materials or systems that meet International Energy Conservation Code standards. 

It also covers a professional home energy audit to identify the most cost-effective improvements for your specific home, helping you prioritize upgrades that will deliver the biggest bang for your buck.

The shift to electric vehicles (EVs) represents more than just a change in transportation—it's a fundamental transformation of how Americans power their daily lives. From the vehicle itself to the home charging infrastructure, federal tax credits have made this transition much more affordable for millions of homeowners. But both tax credits face dramatically shorter timelines under Trump’s new bill.

The EV tax credit ends in two months

The credits for EVs face the tightest timeline: You'll have to sign a lease or purchase agreement by September 30, 2025 to qualify for up to $7,500 in tax credits for a new EV or hydrogen fuel cell vehicle, or $4,000 for a used vehicle. This creates an especially compact timeline for homeowners who want to coordinate their vehicle purchase with home charging installation.

These credits come with income limits so only certain Americans will be impacted—for new EVs, the limit is $150,000 for single filers and $300,000 for joint filers.

Home EV charging tax credits end after June 2026

The convenience of home charging—often considered essential for EV ownership—is also about to become more expensive. The Alternative Fuel Refueling Property Credit (30C), which provides a 30% credit (capped at $1,000) for home EV chargers, expires for property placed in service after June 30, 2026.

The credit covers more than just the charger itself—it includes installation costs, electrical panel upgrades, and wiring necessary to support the charging equipment. For a typical Level 2 home charging installation, which costs about $2,000 to $3,000, the tax credit makes a big dent in the final price tag.

Beyond efficiency improvements, homeowners also looking to generate their own clean energy face the loss of the Residential Clean Energy Credit (25D). Trump’s bill kills this credit after 2025, which currently provides a 30% credit for qualifying energy systems.

The 30% Residential Clean Energy Credit applies to home upgrades like solar panels, batteries, solar water heaters, geothermal heat pumps, fuel cells, and small wind turbines. Unlike the 25C efficiency credits, this credit has no dollar limit, making it especially valuable for larger installations.

For a typical 11 kW solar installation costing $30,000, the solar tax credit would save homeowners $9,000. Combined with battery storage costing $13,000, the total credit a homeowner would receive is almost $13,000—a substantial incentive that disappears after this year.

With tax credits ending and Trump's latest tariffs expected to drive up equipment costs, now is the time to take action. The window for these tax credits is closing rapidly, but there's still time to take advantage of them:

• Start immediately: Begin researching contractors and getting quotes now. Reputable installers are dealing with high demand, and their availability is booking up. 

• Prioritize high-value upgrades: Focus on improvements that offer the biggest tax savings and long-term benefits. Solar panels, heat pumps, and EV chargers can provide both immediate tax benefits and long-term energy savings.

• Consider the whole-home approach: Many of these improvements work better together. For example, a heat pump installation paired with solar and improved insulation and air sealing can maximize your tax savings and energy efficiency while minimizing your carbon footprint.

• Don't wait for equipment failures: If your current HVAC system, windows, or other components are aging, consider replacing them proactively while the credits are still available rather than waiting for failures.

This moment represents more than just tax savings—it's your chance to transform your home into a more efficient, reliable, and valuable asset while contributing to a cleaner environment. Home electrification upgrades reduce your dependence on volatile energy markets, increase your property value, and provide greater comfort and control over your energy costs. The federal incentives simply make it more affordable to capture these lasting benefits.

Every home that makes this transition creates a clean energy ripple effect. Your solar panels feed electricity back to the grid. Your heat pump reduces demand during peak hours. Your improved insulation means less strain on power plants. These individual choices add up to a more stable, sustainable energy system for entire communities.

The window for these incentives is closing fast. Once it ends, this level of federal support may not return for years—if ever. The homeowners who act now will be the ones enjoying savings and real energy efficiency for years to come.