How much will the IRA pay you back for going electric?

Heat pump bucket: $2,000/yr aggregate. General bucket: $1,200/yr aggregate with sub-caps below. Caps applied per tax year; 2025 was the last year.

Total federal tax credits

$11,850(29% effective discount on $41,000 spent)

Reduces your federal tax bill dollar-for-dollar. Stack with state rebates and utility incentives, which often double the savings. §25D credits carry forward if your tax liability isn’t high enough to use them all in one year.

Strategy & gotchas

⚠ OBBBA repeal. The One Big Beautiful Bill Act (H.R.1, signed July 2025) accelerated the termination of these credits. The §25C Energy Efficient Home Improvement Credit ends for property placed in service after Dec 31, 2025, and the §25D Residential Clean Energy Credit ends for expenditures made after Dec 31, 2025 (generally, when installation is complete). The §30C EV-charger credit ends for property placed in service after June 30, 2026. Installs in 2026 do not qualify for §25C or §25D. Use this tool for 2025 installs claimed on your 2025 return (or an amended return).

The §25C $1,200 cap was annual, but 2025 was the last year. Spreading projects across years to reset the cap no longer works: only property placed in service by Dec 31, 2025 counts.

Stack with state and utility rebates. The IRA also funded state-administered rebate programs (HEEHRP and HOMES) up to $14,000 per household for low-to-moderate income. State rollouts vary, so check your state energy office. Utility rebates treated as a "purchase-price adjustment" can reduce the federal credit basis. State income tax credits generally do not. Treasury guidance is still evolving on HEEHRP basis treatment.

Get the energy audit first. It costs ~$500, earns a $150 credit, and tells you which improvements have the best payback in your home. RESNET- or BPI-certified auditor required for the credit.

Non-refundable. Both §25D and §25C are limited to your tax liability. Unused §25D credit carries forward; §25C doesn’t. Plan accordingly if your tax liability is low (retired, low income).

Rentals don’t qualify. §25D allows a primary or second home (not rentals). §25C is primary residence only. For rentals, look at §179D (commercial energy efficient buildings) or business depreciation.

File Form 5695 with your 1040. Keep receipts and manufacturer certification statements for 7 years.

See full energy credits guide for stacking with state/utility rebates, eligibility maps, and HEEHRP rebate interaction. Tax law is fact-specific, so consult a CPA on edge cases.