Residential Clean Energy Credit | IRS (Current 2026 Guidance)

The IRS Residential Clean Energy Credit is a tax credit for people who buy and install qualifying clean energy equipment for a U.S. home. It is not a grant, application, or rebate program. You do not submit a separate funding request to the IRS in advance. Instead, you claim the credit on your tax return with Form 5695.

The most important current rule is timing: the IRS says the credit equals 30% of qualified costs for property placed in service from 2022 through December 31, 2025, and it is not available for property placed in service after December 31, 2025. That means this page is still useful in 2026 for people filing a 2025 return, carrying forward unused credit, or checking whether a project completed before the cutoff was eligible.

If you are planning a brand-new installation in 2026, the current IRS guidance is straightforward: this specific credit generally is not available for that project. That is the first thing to know before you spend time collecting receipts or comparing installers.

At a glance

Item	What IRS says
Credit type	Nonrefundable federal income tax credit
Rate	30% of qualified costs
Main cutoff	Property must be placed in service by 2025-12-31
Filing method	File Form 5695 with your tax return
Who it helps	Taxpayers who paid for qualifying clean energy property for a U.S. home
Home types	New or existing homes in the United States; some second-home and mixed-use situations may qualify
Common eligible property	Solar electric, solar water heating, small wind, geothermal heat pumps, fuel cells, battery storage technology
Major limitation	Fuel cell property has a separate cap
Refundable?	No
Can unused credit carry forward?	Yes, subject to IRS rules

What this credit actually does

Think of the Residential Clean Energy Credit as a way to lower your federal income tax after you install certain clean energy systems at home. If you bought and installed eligible equipment, the IRS lets you calculate a credit based on qualified costs. That reduces the tax you owe for the year you claim it.

This credit is useful because it can apply to large home projects that are expensive up front, such as solar panel systems, geothermal heat pumps, or battery storage. It can also matter for smaller projects when the final tax bill is tight and every dollar of credit helps.

It is not useful if you expect an immediate cash payment from the IRS. The credit is nonrefundable, so it cannot reduce your tax below zero in the year you claim it. If the credit is larger than your tax bill, the unused part may carry forward under IRS rules.

The IRS also ties the credit to the date the property is placed in service, not just the date you signed a contract or paid a deposit. That distinction matters a lot. If the system was ordered in 2025 but not placed in service until 2026, current IRS guidance says the credit is generally not available.

What counts as qualified property

The IRS lists several kinds of property that can qualify if they meet the program rules:

solar electric panels
solar water heaters
small wind turbines
geothermal heat pumps
fuel cells
battery storage technology, if it has at least 3 kilowatt hours of capacity

In many cases, qualified costs can include not only the equipment itself but also labor for on-site preparation, assembly, original installation, and piping or wiring needed to connect the property to the home.

Some costs do not qualify even when they are part of a larger project. The IRS says traditional building components that mainly serve a roofing or structural purpose generally do not count. For example, roof decking or rafters do not qualify just because they support a solar system. Solar shingles or solar roofing tiles may qualify if they actually generate energy.

Used equipment does not qualify. The property must be new.

Who should look at this credit

This credit is worth reviewing if you:

paid for qualified clean energy equipment for a U.S. home
installed a system that was placed in service by the end of 2025
have enough tax liability to benefit from a nonrefundable credit
want to carry forward unused credit to future years
live in a home that has mixed personal and business use and need to allocate costs correctly

It may also be worth reviewing if you live in a condominium or cooperative housing arrangement, because the IRS has special rules for association or cooperative costs and fractional shares.

You should be cautious if you:

are a landlord who does not live in the home
bought used equipment
are dealing with a project first placed in service in 2026
expected the credit to cover interest or loan origination fees
are relying on a rebate or utility incentive without checking how it affects qualified costs

Eligibility basics

The IRS says you may be able to claim the credit for improvements to your main home, and that home can be a house, houseboat, mobile home, condominium, cooperative apartment, or manufactured home that meets federal standards. The home must be in the United States.

The IRS also says you may be able to claim the credit for certain improvements to a second home in the United States if you use it part-time and do not rent it to others. Fuel cell property is treated more narrowly and is not available for a second home under the IRS guidance on this page.

Business use matters. If you use the home partly for business, the IRS limits the credit to the portion of the property used for nonbusiness purposes. If the property is used solely for business, the credit does not apply.

The credit also has cost-basis consequences. If the IRS allows the credit, you generally must reduce the basis of your home by the amount of the allowed credit. That matters later if you sell the property.

What the IRS says about the property categories

Solar electric property

Solar electric property includes equipment that uses solar energy to generate electricity for use in your home. The home does not have to be your main home.

Solar water heating property

Solar water heating property must heat water for use in your home, and at least half of the energy used for that purpose must come from the sun. The IRS also says the property must be certified by the Solar Rating Certification Corporation or a comparable entity endorsed by your state.

Small wind energy property

Small wind property uses a wind turbine to generate electricity for use in connection with your home. The home does not have to be your main home.

Geothermal heat pump property

Geothermal heat pumps must meet Energy Star requirements in effect at the time of purchase.

Battery storage technology

Battery storage technology must be installed in connection with the home and must have at least 3 kilowatt hours of capacity.

Fuel cell property

Fuel cell property is eligible but has a separate cap. The IRS states the credit is limited to $500 for each half-kilowatt of capacity, with an overall cap when more than one person lives in the home.

How much you can get

For qualifying property, the credit rate is 30% of qualified costs. That sounds simple, but the final number can change based on what is actually included in the qualified cost base.

You may need to subtract:

public utility subsidies
certain rebates that function as purchase-price adjustments
any amounts that are really paid for something outside the credit rules

Net metering credits are not the same as a subsidy for purposes of the qualified-cost calculation. The IRS says utility payments for energy you sell back to the grid do not affect qualified expenses.

The IRS also says the credit is nonrefundable. If your tax liability is lower than the credit, you may not be able to use all of it right away.

How to decide whether it is worth your time

For many people, the question is not whether the credit is real. It is whether the credit is large enough to justify the paperwork and whether the project timing still fits the rules.

It is probably worth your time if:

the project was placed in service by December 31, 2025
you have invoices and receipts that clearly separate qualifying costs
your tax liability is high enough to use most or all of the credit
you are filing a 2025 return in 2026 and need to claim the credit now
you expect a carryforward that will matter in future years

It may not be worth much effort if:

your project was not placed in service until 2026
you do not have enough tax liability to use the credit
the installer bundled a lot of nonqualifying work into one invoice and cannot itemize it
the project is mostly structural or cosmetic rather than energy-generating

The biggest practical test is simple: if you cannot prove what the property was, when it was placed in service, and how the costs were broken down, the credit can become hard to defend.

How to claim the credit

The IRS process is a tax-filing process, not an application process.

Confirm that the property type qualifies.
Confirm that the home is eligible.
Confirm the project was placed in service by the cutoff date.
Gather receipts, contracts, and installation records.
Subtract any rebates or incentives that must reduce qualified costs.
Complete Form 5695.
Attach or transfer the result to your return as instructed.

The IRS says you claim the credit for the tax year when the property is installed, not merely when it is purchased. That is another reason placed-in-service documentation matters.

If you are claiming a 2025 project on a 2026 filing, keep your paperwork organized so the timing is obvious. If you are carrying forward unused credit, keep the prior-year return and the carryforward calculation with your records.

Records you should keep

The IRS does not require all of these documents to be filed with your return, but it strongly recommends keeping them:

contract and purchase agreement
paid invoices
proof of payment
manufacturer or installer documentation
installation completion records
permission-to-operate or commissioning records if relevant
any proof that shows the placed-in-service date
rebate or subsidy statements

For mixed projects, keep line-item detail. If one invoice includes qualifying solar equipment, a roof replacement, and electrical upgrades, you want the qualifying items separated clearly. Otherwise, you may not be able to support the amount you claimed.

For condo or cooperative owners, keep records that show your share of the association or cooperative costs and how that share was calculated.

Practical filing tips

The IRS rules are easier to handle if you sort the project into three buckets:

equipment that clearly qualifies
costs that might qualify only in part
costs that clearly do not qualify

That gives you a cleaner starting point for Form 5695 and reduces the odds of overclaiming. If you are not sure about an item, do not guess. Find the invoice detail, installer explanation, or IRS instruction that supports the classification.

Another practical step is to ask your installer for a cost breakdown before tax season. Many credit disputes come from one undifferentiated lump sum. A better invoice now saves time later.

If you used a rebate or credit from a utility, manufacturer, or state program, make sure you understand whether it is a purchase-price adjustment, taxable income, or something else. The IRS treatment is not always the same as the marketing label on the incentive.

Common mistakes

claiming property placed in service after December 31, 2025
using purchase date instead of placed-in-service date
including used equipment
assuming every roof-related cost qualifies
forgetting to reduce costs for a utility subsidy or rebate
claiming the full project cost when only part of it is for nonbusiness use
missing the fuel cell cap
filing Form 5695 without enough backup for the cost calculation

The most expensive mistake is probably the timing error. If the project slips into 2026, the current IRS guidance says this credit is generally gone for that new installation.

When the credit can still matter in 2026

Even though the credit ends for property placed in service after 2025, it can still matter in 2026 in a few common situations:

you are filing a 2025 return and claiming a project finished in 2025
you have carryforward credit from an earlier year
you are documenting a project that was already completed before the cutoff
you want to confirm that a 2025 installation was eligible before you file

That is why this page is still useful. The credit may no longer be available for new 2026 installations, but the filing work has not disappeared for people with 2025 projects or carryforwards.

FAQ

Do I need to apply before I install the system?

No. You claim the credit on your tax return after the property is installed and placed in service.

Is this a refund or a rebate?

No. It is a nonrefundable tax credit.

Can I claim used panels or used batteries?

No. The IRS says used clean energy property is not eligible.

Can renters claim the credit?

The IRS says you may be able to claim the credit for improvements to your main home whether you own or rent it, as long as you meet the other rules and paid for qualifying property. The key is still who paid, where the home is, and whether the property qualifies.

Does a roof replacement qualify?

Usually no. Traditional roofing and structural costs generally do not qualify, although solar roofing tiles or solar shingles may qualify if they generate clean energy.

What if I also use the home for business?

You may still qualify, but you may need to reduce the credit based on the share of the property used for nonbusiness purposes.

Can I claim the credit for a second home?

Sometimes, yes, if the home is in the United States and you use it part-time without renting it to others. Fuel cell property is treated more narrowly.

What if I already received a rebate?

You may need to subtract it from qualified costs if it is treated as a purchase-price adjustment under IRS rules. Do not assume all rebates are treated the same way.

Official links

IRS Residential Clean Energy Credit: https://www.irs.gov/credits-deductions/residential-clean-energy-credit
How to claim a residential clean energy tax credit: https://www.irs.gov/credits-deductions/how-to-claim-a-residential-clean-energy-tax-credit
Instructions for Form 5695: https://www.irs.gov/instructions/i5695
About Form 5695: https://www.irs.gov/forms-pubs/about-form-5695

Bottom line

This is a valuable credit for people who completed qualifying home energy projects before the end of 2025, especially solar, battery storage, geothermal, wind, and fuel cell projects. The credit can be substantial, but it is only as useful as the documentation behind it. If your project timing fits, your home qualifies, and your costs are cleanly documented, it is worth claiming. If your installation slipped into 2026, the current IRS guidance says this specific credit is generally no longer available for that new project.