Energy / IRA Tax Credits
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. Reset annually — time projects to maximize.
Property in eligible census tract?
Post-IRA, residential EV charger credit only applies in low-income or non-urban census tracts. Check the DOE’s eligibility map at eligibility map.
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 — often double the savings. §25D credits CARRY FORWARD if your tax liability isn’t high enough to use them all in one year.
§25D Clean Energy (30% no cap)
$11,100
30% × $37,000 (solar/battery/geo)
§25C Heat pump bucket
$0
30% × $0
§25C General bucket
$750
Insulation + windows + doors + audit + panel
§30C EV charger
$0
Only in low-income/non-urban tracts
Strategy & gotchas
The §25C $1,200 cap resets annually. Strategically time projects: energy audit + insulation in year 1, windows in year 2, doors in year 3 — collect more total credit than bundling.
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 — check your state energy office. Heads up: 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. Costs ~$500, gets you $150 credit, AND tells you which improvements have the best payback in your specific home. RESNET- or BPI-certified auditor required for the credit.
NON-refundable. Both §25D and §25C are non-refundable — limited to your tax liability. §25D unused portion CARRIES FORWARD; §25C does NOT. Plan accordingly if your tax liability is low (retired, low income).
Rentals don’t qualify. §25D allows 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 — consult a CPA on edge cases.