The House and Senate are working on a major tax bill. Both the House and Senate propose allowing energy credits for 2025. However, the Senate bill proposes eliminating some energy credits within 180 days after the tax bill is enacted.

While the legislation is still in process, there is a reasonable probability the bill will pass this summer. Before changes are passed, taxpayers can still benefit from energy credits during 2025. It is an excellent time to plan for these potential benefits because they are likely to phase out in early 2026.

There are four primary energy credits that benefit taxpayers. These include a new or used clean energy vehicle, improvements that make your home energy efficient or the purchase of items that help with home energy production.

1. New Clean Vehicles — There is a tax credit up to $7,500 for the purchase of most new clean energy vehicles. To qualify for this credit, the vehicle must meet specific criteria based on the source of the battery and other components. The credit has an income limit of $150,000 for a single filer, $225,000 for head of a household and $300,000 for joint filers. The credit is available for vehicles with a Manufacturer’s Suggested Retail Price (MSRP) under $80,000 for SUVs, vans and trucks and an MSRP under $55,000 for most other cars.
2. Used Clean Vehicles — There is a credit for the lesser of $4,000 or 30% of the sale price for a used clean vehicle. The income limit is $75,000 for a single filer, $112,500 for a head of household and $150,000 for joint filers. The used clean vehicle must qualify under specified rules, and most of these are electric vehicles.
3. Energy Efficient Home Improvements — There is a credit for up to 30% of the cost of qualifying improvements that make your home more energy-efficient. This includes ENERGY STAR windows, doors, insulation or similar items. The general annual limit is $1,200 for this credit.
4. Residential Clean Energy — There is a 30% credit for solar panels, wind energy, geothermal heat pumps and battery storage. This credit does not have a limit, so a homeowner may install a substantial solar panel and battery system and still qualify for this credit.

Editor's Note: There is likely to be availability for most of these credits during the remainder of 2025. The one exception is the used clean vehicle credit that may lapse 90 days after the enactment of the bill. The probable date for the elimination of the other credits is early in 2026. If the final bill is enacted in July, it is probable that most energy credits will be available for the rest of 2025.