By the end of September, the initial federal clean energy tax credit for electric vehicle purchases is set to be discontinued. This change comes as a result of the One Big Beautiful Bill Act, enacted by Congress this past summer.
Among its provisions, the act is also poised to prematurely terminate well-established federal home energy tax credits. These credits have been crucial in enabling Americans to reduce their energy costs and adopt more environmentally friendly practices.
Zach Pierce, head of policy at Rewiring America, an electrification nonprofit, stated, “This legislation eliminated several tax credits that have long assisted families and households nationwide in affording home or vehicle improvements. These improvements have lowered energy bills and made homes more efficient and safer by facilitating the transition to contemporary appliances.” The organization recently where homeowners can find details on the expiring federal tax credits, investigate additional state, local, and utility incentives, and locate installers. Pierce added, “The premature discontinuation of these credits, many initially passed by a Republican-led Congress and extended under the Trump Administration, largely represents a self-imposed setback, removing an accessible home upgrade opportunity for numerous families across the nation.”
Experts agree that the advantages of clean energy tax credits are evident. According to Pierce, “Utilizing these credits allows the typical household to reduce their yearly energy expenditures by more than 70%, translating to an average annual saving of $2,200 per home.”
Despite the scheduled phase-out of these credits, an opportunity remains for individuals intending to acquire an electric vehicle, install solar panels, or upgrade to a heat pump. Here is essential information:
Electric Vehicle Credits
The tax credits for electric vehicles are slated to be the first to conclude. Currently, the government provides two distinct credits: up to $7,500 for the purchase of new vehicles and $4,000 for used ones.
“This represents a substantial amount of savings,” Pierce noted.
This credit is set to expire on September 30. Therefore, the vehicle purchase must occur by or on this date to be eligible for claim on your 2025 tax return. Nevertheless, EV credits are subject to certain limitations concerning qualifying incomes, vehicle price points, and eligible models. The IRS has that potential buyers should review prior to making a purchase.
Solar Power Installation Credits
While a tax credit for solar panel installations was initially projected to remain available until 2032, it will now cease on December 31. This credit provides an unlimited 30% discount on qualified expenditures—which encompass labor, as well as certain piping and wiring costs—for homeowners acquiring and installing solar panels.
To claim this credit on your 2025 tax return, the purchase and installation of the panels must be completed by year-end. Lisa Frank, executive director of the nonprofit Environment America, advises, “I recommend beginning to obtain quotes now and selecting an installer to ensure your project can proceed quickly enough to secure that 30% tax credit.”
Energy Efficiency Home Improvement Credits
The Energy Efficiency Home Improvement Credit, which provides 30% coverage for specific eligible expenses and upgrades that enhance energy efficiency—including new insulation or heating systems—is also scheduled to expire on December 31. This credit can be applied to initiatives such as modernizing your home’s heating and cooling infrastructure or transitioning to a heat pump.
Pierce mentioned, “This credit also allows for other energy efficiency enhancements, such as replacing windows and doors, or conducting an energy audit.” An energy audit, typically carried out by certified professionals, evaluates your home’s energy consumption patterns (efficient or otherwise) and pinpoints optimal improvements, like adding more insulation to prevent heat loss.
The highest possible credit amount for these improvements stands at $1,200.
EV Charger Installation Credits
For electric vehicle owners contemplating the installation of a home charger, there is a slightly extended timeframe to act. A federal tax credit provides $1,000 off for EV chargers installed prior to June 30, 2026.
Even if these tax credits cannot be utilized before their expiration, specialists suggest that investigating these home improvements remains valuable. Numerous state and local rebates will persist, and electrifying your home can still lead to long-term financial savings, even without federal tax credits.
Pierce commented, “The conclusion of these tax credits serves as a crucial reminder for individuals to thoroughly examine how they might benefit from these upgrades.” He added, “However, even if deadlines are missed and upgrades aren’t finalized by year-end, people should not despair. They ought to keep exploring how these improvements could still serve their interests.”