On July 4, 2025, President Trump signed the One Big Beautiful Bill (OBBB) Act into law, introducing significant changes to federal tax provisions. Over the coming weeks, we’ll break down key aspects of this legislation that could affect your tax return, starting with expiring energy-related tax credits. Act quickly to take advantage of these savings before they lapse.
Don’t Miss Out: Energy Tax Credits Expiring in 2025
Several federal tax credits for energy-efficient upgrades and electric vehicles are set to expire soon. If you’re planning home improvements or purchasing a clean vehicle, now is the time to act to maximize your tax savings.
Energy Efficient Home Improvement Credit
The Energy Efficient Home Improvement Credit incentivizes eco-friendly upgrades to your home, but eligible projects must be completed by December 31, 2025. This nonrefundable credit offers up to $1,200 per year, subject to the following limits:
- $600 annually for residential energy property (e.g., central air conditioners, natural gas or propane water heaters, or hot water boilers).
- $600 annually for exterior windows and skylights.
- $500 annually for exterior doors (up to $250 per door).
- $150 annually for home energy audits.
Action Steps: Confirm with your installer that your upgrades qualify for the credit. Keep detailed records of expenses, including receipts and manufacturer certifications. Visit energystar.gov or irs.gov for a list of eligible improvements and requirements.
Residential Clean Energy Credit
The Residential Clean Energy Credit provides a 30% credit for installing clean energy systems, such as:
- Solar panels (electric or water heating)
- Geothermal heat pumps
- Small wind energy systems
- Fuel cells
- Qualified battery storage technology
This credit also expires on December 31, 2025. There is no annual cap, but installations must be completed by the deadline.
Action Steps: Work with certified installers and verify that your equipment meets IRS standards. Save documentation for tax filing, as this credit can significantly offset installation costs.
Clean Vehicle Credit
The Clean Vehicle Credit offers tax savings for purchasing electric or plug-in hybrid vehicles for taxpayers with income under $150,000 ($300,000 for married couples filing jointly), but you must act by September 30, 2025. Eligible vehicles must meet North American assembly requirements and specific criteria for critical minerals and battery components:
- New clean vehicles: Up to $7,500 credit.
- Previously owned clean vehicles: Up to $4,000 credit.
Action Steps: Confirm vehicle eligibility with your dealership or check the IRS’s qualified vehicle list at irs.gov. Note that income limits and other restrictions may apply, so review IRS guidelines to ensure you qualify.
Plan Ahead
With these credits expiring soon, prioritize your purchases or installations to secure these tax benefits. Stay tuned for more updates on the OBBB Act and how it may impact your 2025 tax return.