If you’re thinking of upgrading your home with new insulation, windows, a better heat pump, or even solar panels — the IRS just made it easier to save big on your taxes.

In July 2025, the IRS released new guidance clarifying two powerful tax credits available to homeowners: the Energy Efficient Home Improvement Credit (§25C) and the Residential Clean Energy Property Credit (§25D).

Here’s what you need to know
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1. Energy Efficient Home Improvement Credit (Section 25C)

This credit is for existing homes only — not new builds.

You can now claim:

• Up to $1,200 per year for qualified energy-efficient improvements, including:
  • Insulation
  • Energy-efficient exterior windows and doors
  • Home energy audits (up to $150)
  • Advanced circuit panels

And an additional:

• Up to $2,000 per year for certain HVAC systems like:
  • Heat pumps
  • Biomass stoves
  • High-efficiency water heaters

Example: You’re a freelance graphic designer who works from home and installs new energy-efficient windows ($800), a heat pump ($5,000), and insulation ($1,000). You may qualify for a $2,000 credit for the heat pump and $1,200 more for the other upgrades — totaling $3,200 off your tax bill.

2. Residential Clean Energy Credit (Section 25D)

This credit is for renewable energy systems — available for both new and existing homes.

You can claim:

• 30% of the total cost of qualified clean energy systems
• No annual cap (this is a major win)

Eligible systems include:

• Solar panels
• Solar water heaters
• Wind turbines
• Geothermal heat pumps
• Battery storage (new!)

Example: A YouTuber installs a solar panel system and battery storage for their home studio costing $25,000 total. You can claim a $7,500 tax credit (30% of $25,000) on your return.

Important Reminders

• These credits apply to your primary residence, not rental properties or second homes.
• Improvements must meet energy-efficiency standards — make sure you check manufacturer certifications.
• You must own the home (not rent) to qualify for 25C.
• Installation costs count for most of 25D, not 25C.

Who Should Pay Attention?

We work with a wide range of homeowners who can benefit from this update, including:

• YouTubers and TikTokers upgrading their home studios
• Shopify and Amazon sellers investing in solar to lower utility bills
• Filmmakers and creatives adding insulation or battery storage for energy reliability
• Dentists and doctors working from home and making HVAC upgrades
• Local business owners and tradespeople adding clean energy systems to their homes

Planning Tip

These credits are available for tax years 2023 through 2032, but the sooner you act, the sooner you’ll see the tax benefit. And with the $1,200 25C cap resetting each year, spreading upgrades over time can maximize your credit.

Need Help Figuring Out Your Energy Credit Eligibility?

At Velin & Associates, Inc., we help creators, small business owners, and homeowners across California:

• Calculate their eligible energy credits
• File correctly to avoid IRS issues
• Strategically time improvements for the biggest tax savings

Let us help you turn home upgrades into real tax relief. For more information about our services, please visit our website.

Velin & Associates, Inc

8159 Santa Monica Blvd STE 198/200 West Hollywood, CA 90046
323-902-1000
dmitriy@losangelescpa.org