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Residential Clean Energy Credit | IRS (Current 2026 Guidance)

IRS residential clean energy credit guidance for qualified home energy property, including current placed-in-service cutoff language and filing controls.

JJ Ben-Joseph
JJ Ben-Joseph
💰 Funding 30% of qualified eligible costs for property installed through 2025, with carryforward of unused credit subject to IRS rules
📅 Deadline Dec 31, 2025
📍 Location United States
🏛️ Source Internal Revenue Service
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Status Update (February 2026)

IRS currently states the Residential Clean Energy Credit is 30% for qualified property installed from 2022 through December 31, 2025, and that the credit is not available for property placed in service after December 31, 2025.

IRS Form 5695 instructions for tax year 2025 also reflect this termination language.

IRS post-legislation guidance pages for 2025 changes similarly indicate this credit ends for property placed in service after 2025.

What Still Qualifies

For eligible installation timing, IRS identifies property types such as:

  • solar electric,
  • solar water heating,
  • small wind,
  • geothermal heat pumps,
  • fuel cells,
  • battery storage technology (subject to applicable requirements).

Qualified labor and installation costs may also count when they meet IRS rules.

2026 Filing Reality

In 2026, many taxpayers will still file claims for 2025 placed-in-service projects. The key distinction is:

  1. Filing year can be 2026,
  2. But qualifying installation timing must still be on or before 2025-12-31.

If equipment is first placed in service in 2026, this credit is generally not available under current IRS guidance.

Rebate and Basis Coordination

Credit errors often come from mis-handling price adjustments. Before calculating Form 5695:

  • separate gross contract price from adjustments,
  • classify rebates correctly,
  • avoid double counting costs supported by excluded subsidies.

For mixed-use situations, allocate personal-use and nonqualifying portions carefully.

How to Claim Correctly

  1. Verify equipment category and placed-in-service date.
  2. Gather contracts, invoices, paid receipts, and commissioning evidence.
  3. Build a line-item eligibility worksheet by project component.
  4. Complete Form 5695 and transfer results to the return.
  5. Retain records for substantiation and basis tracking.

Unused credit amounts may carry forward subject to IRS rules.

Common Mistakes

  • Claiming systems placed in service after 2025 cutoff.
  • Treating every local utility rebate the same way.
  • Including nonqualifying structural costs.
  • Filing without adequate installation-date documentation.

Audit-Ready Record Strategy

Keep a dated project timeline that shows contract date, installation milestones, permission-to-operate date (if relevant), and the final placed-in-service date used on Form 5695. For multi-component projects, separate each component’s cost and status so the IRS calculation path is easy to follow.

If your installer bundle includes both qualifying and nonqualifying items, request an itemized invoice revision before filing. Clear itemization reduces credit-calculation disputes and supports defensible return positions.

Practical Filing Tip

Create a package with one tab per system (solar, battery, geothermal, etc.) including invoice, payment proof, and placed-in-service evidence. That structure makes Form 5695 preparation faster and audit response cleaner.

Carryforward and Nonrefundability Reminder

This credit is nonrefundable, so it cannot reduce tax below zero in a given year. Unused amounts may carry forward under IRS rules, which makes accurate year-to-year tracking essential for taxpayers claiming large multi-component projects.

Keep a carryforward worksheet with each return copy so future filings reflect prior-year amounts correctly and avoid duplicate or omitted claims.

2026 Return Positioning

For tax year 2025 returns filed in 2026, focus on proving placed-in-service timing and item-level eligibility. Many denied claims are timing failures, not equipment-category failures. Organize records so each claimed component clearly ties to a qualifying in-service date before December 31, 2025.

Official Sources