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Final Call: Countdown to Key Energy Tax Credit Expiration

In recent years, as discussions around climate change gained momentum, the federal government has been proactive in motivating homeowners to embrace sustainable energy solutions, providing key tax credits for several green initiatives. This includes credits for installing solar panels, upgrading to energy-efficient home systems, and purchasing electric vehicles (EVs). However, significant legislative changes—dubbed the "One Big Beautiful Bill"—are transforming the landscape of these credits, hastening their expiration and urging consumers to act swiftly to leverage these fiscal benefits.

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Home Solar Energy Credits - Previously, the Residential Clean Energy Credit played a pivotal role in encouraging homeowners to invest in solar electric installations. This credit offered a generous 30% deduction from federal taxes on the cost of installing qualified solar systems, including solar water heating, geothermal heat pumps, and wind energy systems.

Originally, property expenditures were eligible through December 31, 2032. However, the "One Big Beautiful Bill" mandates a new deadline—December 31, 2025. Homeowners must have their solar installations completed and validated by local building inspectors by this date to qualify.

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Home Energy Efficient Improvements Credit - This credit was previously available to homeowners making qualifying energy efficiency upgrades, such as high-efficiency HVAC systems and energy-efficient windows. Homeowners could claim 30% of the cost, up to $1,200 annually.

Initially set for expiration in 2032, the legislation has moved this deadline to December 31, 2025, necessitating prompt planning and execution, particularly due to inspection requirements by local authorities.

Credits for Electric Vehicles (EV)

  • The New EV Credit: The Clean Vehicle Credit incentivizes the purchase of new EVs with a credit up to $7,500—provided they meet specific mineral and battery requirements, and pricing guidelines ($80,000 for SUVs and trucks, and $55,000 for other vehicles) and are assembled in the U.S.

    This credit was available for vehicles purchased by 2032, but with the new act, the cutoff has been advanced to September 30, 2025, pressuring buyers to expedite acquisitions.

  • The Previously Owned EV Credit: Encouraging used EV purchases, this provides up to $4,000 or 30% of the sale price for qualifying vehicles, with constraints like eligibility based on income and sale price caps of $25,000.

    This credit, originally ending in 2032, will now end on September 30, 2025, requiring strategic timing due to fluctuating inventory levels.

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The Urgency to Act - The implementation of the "One Big Beautiful Bill" unambiguously communicates an urgent call to action for consumers and homeowners: Act now or miss out on financial incentives previously designed to ease the transition towards sustainable energy practices.

Those considering renewable energy investments or adding clean vehicles to their portfolio must expedite their planning, purchase, and installation efforts. Notably, these federal tax credits have become critical motivators, setting a new course that demands immediate, decisive action to close this chapter on incentivized green initiatives.

For anyone with questions regarding these credits' eligibility or deadlines, please reach out to our office. We are here to assist clients in understanding these changes and planning their sustainable investments efficiently. As a key player in tax and accounting in the greater Orlando area, we provide expert advice tailored to help you navigate these pressing legislative developments and make the most of existing opportunities.

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