What Qualifies for the Energy Efficiency Tax Credit in 2025?
Did you know you can claim home improvements on your taxes? Most energy efficiency home improvements, including insulation, air sealing, heat pumps, and more are eligible for the Energy Efficient Home Improvement Tax Credit, which saves you 30% on qualifying expenses.
If you’ve been thinking about installing new insulation or upgrading your heating and cooling system, you don’t want to miss out on this chance to save. In this guide, we explain everything you need to know about the Energy Efficient Home Improvement Credit for 2025.
What Is the Energy Efficient Home Improvement Tax Credit
The Energy Efficient Home Improvement Credit (25C) allows you to claim up to $3,200 a year in federal tax credits when you make qualifying home improvements. The credit makes energy-saving home improvements more affordable, helping to alleviate the burden of rising energy costs while reducing carbon emissions.
What Expenses Qualify for the 25C Tax Credit in 2025?
Most energy efficient home improvements are eligible for the tax credit, but there are limits that vary by upgrade.
Insulation & Air Sealing
Insulating and air sealing your home is the most effective way to improve its energy efficiency and reduce energy costs. It’s also one of the most affordable energy efficiency improvements you can make, especially when you claim the federal tax credit for insulation.
Insulation and air sealing materials are eligible for an insulation tax credit worth 30% of the project costs (excluding labor) up to $1,200. You can claim the credit for almost any type of home insulation or air sealing, including:
Attic insulation
Exterior wall insulation
Basement insulation
Home Energy Audits
If you’re not sure how energy efficient your house is or what improvements to make, an energy audit is the best place to start. An energy audit is a professional evaluation of your home’s energy efficiency that identifies problem areas and the best energy-saving opportunities.
At Sustainergy Cooperative, we start every insulation project with a free energy assessment. We also offer more in-depth paid audits that include additional testing like infrared imaging and blower door testing.
You can save on your energy audit costs with the energy efficiency tax credit. Energy audits are eligible for federal tax credit worth up to $150 dollars.
Heat Pump HVAC Systems & Water Heaters
Heat pumps provide all-electric, energy efficient heating and cooling. Heat pump HVAC systems and heat pump water heaters are eligible for a 30% tax credit, up to $2,000 per year.
Heat pumps are generally considered the most energy efficient way to heat and cool your home, but if your house isn’t well insulated and air sealed, much of their efficiency will be lost. If you’re thinking about installing a heat pump, it’s important to make sure your house is properly insulated and air sealed first so it doesn’t waste the energy your new heat pump saves.
The energy efficient home improvement tax credit makes it easier to prioritize both upgrades. You can claim a $1,200 insulation tax credit and a $2,000 heat pump tax credit in the same year, for a total of $3,200 in savings.
Maximize Your Savings with Sustainergy Cooperative
Improving your home’s energy efficiency has a long list of benefits, from saving you money on your energy bills to improving your home’s indoor air quality. With the right improvements, you’ll have a home that’s healthier, more comfortable, and more affordable to heat and cool.
Sustainergy Cooperative is the insulation company homeowners in the Greater Cincinnati area trust. We are a highly experienced whole-home efficiency company that installs high-impact insulation and energy efficiency solutions at the lowest possible cost. We are here to help you navigate the incentives process to ensure you qualify for the maximum savings.
