FEDERAL ENERGY EFFICIENT HOME IMPROVEMENT CREDIT (25C)
Federal electrical panel tax credits
The 25C Energy Efficient Home Improvement Tax Credit makes it more affordable for Americans to install an electrical panel and complete other upgrades to improve home energy efficiency.
View other eligible projects under this tax credit:
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Introduction
Introduction
Disclaimer: The information presented here is for educational purposes only. It is not intended to provide specific tax guidance. For questions regarding your individual tax situation, we suggest consulting with your tax advisor.
Tax Credit
Up to $600
Available now
Please note: If you're claiming 25D for a rooftop solar or battery storage installation and that installation required you to upgrade your electrical panel, you may be able to apply 25D to those costs as well. But that’s unrelated to the 25C tax credit.
The 25C Energy Efficient Home Improvement Tax Credit provides a tax credit for eligible electrical panels (up to 30% of project costs, capped at $600) when the panel is installed with—and enables the use of—qualified appliances like heat pumps and heat pump water heaters.
Electrical panels are just one of the home improvements that may qualify for the 25C Energy Efficient Home Improvement Credit. Projects like heat pumps, heat pump water heaters, and insulation may also qualify.
Source: IRS
As noted above, all weatherization projects are combined with electrical panel upgrades for a total project cap of $1,200 per year. This means that, for example, you could claim $600 on a subpanel to enable a heat pump to be installed, and also claim $600 towards insulation.
25C Energy Efficient Home Improvement Credit is limited to $2,000 per year for heat pump water heater installations, and there is a $3,200 yearly cap for all 25C tax credits combined.
The good news is that there’s no lifetime cap, so you can continue to make efficiency upgrades year after year and claim credits for each year’s qualifying home improvements.
If you’re interested in upgrading your electrical panel and would like to claim the 25C tax credit, talk to your contractor before you start the project. It’s also a good idea to double-check that your purchase qualifies for the 25C Energy Efficient Home Improvement Tax Credit before you buy a panel and have it installed.
Tax credit limitations
The 25C Heat Pump tax credit may cover up to 30% of your electrical panel project costs, capped at $600.
Generally, you must subtract any price adjustments from the cost of the item. This can mean rebates, utility subsidies, financial incentives, and anything else that lowers the price point. This part can get a little tricky, so be sure to check the Frequently asked questions about energy efficient home improvements and residential clean energy property credits for more information.
The 25C tax credit is “non-refundable,” which means that you can't get back more than you pay in federal income taxes.
If 30% of your project’s cost is $600, but you only owe $300 in federal income taxes that year, you would receive a $300 credit.
Who qualifies for the electrical panel tax credit?
The 25C tax credit can be used by renters, and homeowners making upgrades to their primary or secondary home.
Homeowners and renters making upgrades to their existing home
Renters and homeowners can use this tax credit for electrical panels in homes that are already built. Homeowners can use this tax credit for primary and secondary homes.
Landlords can never claim this credit for homes they rent out but do not use as a residence themselves.
For more information, see Frequently asked questions about energy efficient home improvements and residential clean energy property credits.
To learn about credits for new homes, see Section 45L New Energy Efficient Home Credit, which offers incentives for Zero Energy Ready homes.
No income requirements
There are no income limitations for the 25C Tax Credit — but like nearly all federal tax credits, you can only use it if you pay federal income taxes.
Which electrical panels qualify?
Electrical panels must meet a few requirements to qualify.
Qualifying electrical panels must meet the standards of the National Electric Code (NEC) and have a capacity of 200 Amps or more. This means that your new/upgraded panel must be able to serve a load of at least 200 Amps, but you don't need 200 Amps of incoming utility service. Smart panels may qualify if they allow you to serve a load of 200 Amps.
For more on the efficiency requirements of other purchases, see this IRS FAQ.
How to use the electrical panel tax credit
Fill out IRS Form 5695 and submit it with your federal tax return.
Keep track of (or track down) the invoice from your contractor.
Fill out IRS Form 5695, Residential Energy Credits. For instructions on how to fill out the form, including more in-depth information about individual amounts you can claim, see the IRS’s Instructions for Form 5695.
Submit the form along with your annual tax return.
You may enjoy a lower tax bill or bigger refund!
You can claim the standard deduction and claim the 25C tax credit. You don't have to itemize.
You can only apply for and claim the 25C tax credit for energy upgrades in the year in which a project is completed. For example: if you purchased your equipment in late 2023 but didn’t have it installed until 2024, you have to file the tax credit with your 2024 tax return.
Discover other incentives with the incentives calculator!
There are other incentives that you may qualify for. Our incentive calculator will show you a personalized list of incentives.
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