IRA Energy Credits at a Glance
The Inflation Reduction Act (IRA) of 2022 is the largest climate investment in U.S. history, providing over $370 billion in energy incentives through 2032. For homeowners, this translates to thousands of dollars in available tax credits and rebates.
Section 25C - Energy Efficient Home Improvement Credit
This annual credit covers 30% of costs for qualifying improvements to your primary residence:
- Heat pumps: Up to $2,000/year
- Insulation & air sealing: Up to $1,200/year
- Windows: Up to $600/year
- Exterior doors: Up to $500/year ($250/door)
- Energy audit: Up to $150
- Electrical panel upgrade: Up to $600
The total annual limit is $3,200 (combining the $2,000 heat pump credit with $1,200 for other improvements).
Section 25D - Residential Clean Energy Credit
This credit has no annual cap and covers 30% of:
- Solar panel systems
- Solar water heaters
- Geothermal heat pumps
- Battery storage (3+ kWh)
- Small wind turbines
A $30,000 solar installation = $9,000 tax credit with no cap.
Key Dates
The 30% rate applies through December 31, 2032. It then drops to 26% in 2033 and 22% in 2034. Act sooner rather than later - especially since some state and utility programs have limited funding.
How to Claim
File IRS Form 5695 with your annual tax return. Keep all receipts, manufacturer certifications, and contractor invoices. The credit reduces your tax liability dollar-for-dollar.