Updated Federal Tax Benefits for Buying Energy Efficient Appliances

This article on Federal Tax Benefits for Buying Energy Efficient Appliances was updated on August 17th, 2025. The update provides information on energy tax rebates and incentive programs which have changed or been eliminated with the signing of the One Bug Beautiful Bill Act. 

Federal Tax Benefits for Buying Energy Efficient Appliances

‍In August 2022, the Inflation Reduction Act  expanded and amended the credits available for energy-efficient home improvements and clean energy equipment, giving homeowners the opportunity to save money while also reducing energy use and supporting environmental sustainability.

However, in July 2025, President Trump signed the One Big Beautiful Bill Act, which rolls back many of these clean energy incentives and eliminates programs that could have saved homeowners thousands of dollars. Several important deadlines are now approaching. 

When it comes to upgrading household appliances, not only can you enhance the efficiency of your home, but you may also be eligible for significant federal tax benefits. Keep in mind the deadlines for rebates moved up on many of these programs. See new deadlines below. 

Understanding Energy-Efficiency Tax Credits

These credits are designed to reward home owners who invest in appliances that meet specific energy-saving criteria set by the government. Energy-efficient appliances consume less energy compared to their conventional counterparts, resulting in reduced utility bills and a smaller environmental footprint.

Maximizing Tax Benefits

Be sure to research which appliances qualify for the tax credit. Before making a purchase, research Energy Star-certified appliances which qualify for tax credits. 

• Save all receipts and product documentation, including Energy Star labels and manufacturer certifications, as proof of eligibility for tax credits. You will need these documents when filing your taxes.
• Speak with a tax attorney or accountant about the tax laws and incentives. A tax professional or accountant can help you navigate the eligibility criteria and maximize your tax benefits.
• Claim your tax credits by using Form 5695 (residential energy credits), when filing your federal income taxes. Be sure to accurately report the eligible expenses and follow IRS guidelines to avoid errors or discrepancies.

Inflation Reduction Act Guidebook

If you are not sure if an appliance qualifies or have questions about the process, Check here, the Inflation Reduction Act Guidebook, also in the pdf below. 

Federal IRC 25C Energy Efficient Home Improvement credit ends on December 31, 2025

This tax credit allows home owners to claim tax credit for heat pumps, air conditioner, furnaces and boilers. 

Deadline for equipment installation and payment of December 31, 2025

Go to the Energy Star website and type in your zipcode to learn more about available programs. 

Federal IRC 25D Residential Clean Energy Credit ends December 31, 2025

This tax credit allows home owners to claim tax credit for solar panels, solar water heaters, geothermal heart pumps, battery storage technology

Deadline for expenditures placed in service-December 31, 2025

IRC Clean Vehicle Credit ends September 30, 2025

For New Plug-In Electric and Fuel Cell Electric Vehicles cars purchased from January 1, 2023 through September 30, 2025.

New Energy Efficient Home Credit ends June 30, 2026

This credit for home builders was extended through the end of 2032 in the Inflation Reduction Act. Now, this credit will end for homes purchased after June 30, 2026. 

What is Available for Home Owners In the DMV

In Washington DC, the deadline for HVAC improvements is September 30, 2025. Learn more about residential heating and cooling rebates on the District of Columbia Sustainable Energy Utility website

In Maryland, the deadline varies depending on location. Learn more about the rebates on the BG&E, Pepco and EmPower Maryland websites. Montgomery County Maryland offers rebates, financing and tax credits, learn more here. 

In Virginia, Washington Gas customers can obtain a rebate when they upgrade to Energy Star heating equipment. Learn more using this link for Virginia Washington Gas customers  and finally, Dominion Energy has several energy saving programs. Learn more on their website, Dominion Energy Home Energy Savings

Resources:

District of Columbia Sustainable Energy Utility

Virginia Energy Sense

Washington Gas Rebates in Virginia

Montgomery County Maryland Energy Connection Rebates & Tax Credits

EmPower Maryland 

Maryland Pepco customers

National Association of Home Builders Expiring Energy Tax Credits

Investopia Electric Cars

Rewiring America

IRS Credits and Deductions 

Disclaimer: the information provided here is for informational purposes only. This is not intended to provide specific tax guidance. For questions about your specific tax situation, consult your tax advisor. 

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