How Energy & Home Improvement Tax Credits Change Under the One Big Beautiful Bill Act

When you're making changes to your home, there's always a nice feeling that comes from choosing improvements that offer a bit of incentive. It's why so many New York, New Jersey, and Connecticut homeowners chose to invest in solar panels or new, energy-efficient HVAC systems over the last few years— to get the tax credits that came with them.

However, the One Big Beautiful Bill Act (OBBB) has rolled back many of the energy and home improvement tax incentives that homeowners and contractors alike expected to claim come tax season. As expiration dates loom, there is a lot you need to know if you don't want to miss out on thousands of dollars in savings.

In this blog, we're looking at:

• What energy and home improvement tax credits are ending

• The important deadlines you need to know

• What you can do next

  
  

Which Energy And Home Improvement Tax Credits Are Ending Under The OBBB?

While many homeowners expected to claim tax credits for years to come on their energy and home improvements, the OBBB has rolled these back and implemented tight deadlines in many areas.

Energy Efficient Home Improvement Credits (25C)

These improvements cover those related to:

• Insulation

• Windows and doors

• Heat pumps

• Furnaces

• Water heaters

• Panel upgrades

• Energy audits

Any deductions made under this category carry an annual cap of $1,200 for general improvements and $2,000 for those that fall under the heat pump category.

Although these credits originally extended through 2032, they now end after December 31, 2025.

Residential Clean Energy Credit (25D)

These improvements cover those related to:

• Solar PV

• Battery storage

• Geothermal energy

• Small wind energy

Previously, you could claim up to 30% of these costs through 2032. However, these credits now end after December 31, 2025.

New Energy Efficient Home Credit (45L)

These credits apply to builders and developers who are constructing energy-efficient single-family and multifamily homes. A particularly lucrative credit, if contractors met certain standards, they could receive up to $5,000 per home.

Like the other categories, these tax credits end at the end of 2025.

Deadline Details to Know 

With these tax credits set to expire by the end of 2025, there are key conditions that tri-state area homeowners need to be aware of— specifically when it comes to the nuances of certain rules.

In order to claim these tax credits before the deadline, improvements must have been properly installed and operational by the end of 2025. This is known as “placed in service”. It doesn't matter if you have paid for the project— everything needs to be up and running to earn credit eligibility.

Should I Move Forward With Projects Before Home Improvement Tax Credits End?

If you were initially delaying energy and home improvement projects because you thought you had much more time to claim the tax credits, you're not alone. Many homeowners are now weighing their options between ditching projects entirely and rushing to get them done.

You might watch to accelerate a project to:

• Secure the 30% credit before the expiration date

• Limit your risk of passing the “placed in service” deadline

• Take advantage of lower costs before demand strikes

• Improve your utility bills sooner

Depending on the project, it’s likely worth speaking with your project provider and tax expert to determine your best course of action and what you can do to optimize your tax credits. 

Keeping Tri-State Homeowners Ready for Tax Changes

No matter how laws change, you can rely on AVM DeMars as your Long Island tax expert to keep you aware of how updated policies affect your wallet. We offer expert tax advocacy for homeowners across New York, New Jersey, and Connecticut to ensure you take advantage of every credit and deduction possible come tax season.

 Contact us today to begin planning your tax strategy!