Federal 25C weatherization tax credits

The 25C Energy Efficient Home Improvement Tax Credit makes it more affordable for Americans to complete home weatherization projects and complete other upgrades to improve home energy efficiency.

View other eligible projects under this tax credit:

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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 $1,200

Available now

Weatherization can protect your home from the elements, prevent you from wasting energy, and keep your home cool in the summer and warm in the winter. Weatherizing your home can also allow you to install a smaller, cheaper heat pump while still meeting all your heating and cooling needs. 

Weatherization upgrades include improvements like insulation and air sealing, and the 25C tax credit can also be used for qualifying windows, skylights, and exterior doors.

What is the 25C weatherization tax credit?

The federal government recently passed a law that offers all households who pay federal income taxes up to a $1,200 credit for weatherizing their homes.

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The 25C Energy Efficient Home Improvement Tax Credit provides a tax credit for eligible weatherization projects (up to 30% of project costs, capped at $1,200). 

In this article, we’ll help you understand if your weatherization project is eligible for a tax credit.

Weatherization upgrades are just some of the home improvements that qualify for the 25C Energy Efficient Home Improvement Credit. Projects like home energy audits, heat pump installations, and electrical panel upgrades qualify as well.

Project type:Electrical componentsHow much funding can you receive from 25C for qualifying projects?:

Up to 30 percent, generally capped at $600 per year, for the items listed below:

  • Panelboards
  • Sub-panelboards
  • Branch circuits
  • Feeders
Project type:Heat pumps and heat pump water heatersHow much funding can you receive from 25C for qualifying projects?:

Up to 30 percent, capped at $2,000 per year for qualified:

  • Electric heat pumps
  • Electric heat pump water heaters
Project type:Weatherization (insulation, air sealing, and ventilation)How much funding can you receive from 25C for qualifying projects?:

Up to 30 percent, capped at the following amounts for each type of project:

  • Insulation and air sealing: $1,200
  • Exterior doors: $250 per door, $500 total
  • Exterior windows and skylights: $600

All weatherization projects are combined with electrical panel upgrades for a total project cap of $1,200 per year.

Project type:Home energy auditHow much funding can you receive from 25C for qualifying projects?:Up to $150. Home energy audits must be performed by a certified home energy auditor, and include a full home inspection and report to qualify.

Source: IRS

The 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 weatherizing your home and would like to claim the 25C tax credit, talk to your contractor before you start the project. 

Tax credit limitations

The 25C Weatherization tax credit may cover up to 30% of your weatherization project costs, capped at $1,200. 

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 $1,000, but you only owe $500 in federal income taxes that year, you would receive a $500 credit.

Homeowners making upgrades to their primary home

This tax credit only applies to weatherization projects for homes that are already built and used as the primary residence by the taxpayer. 

Renters are not eligible. Homeowners cannot use this tax credit for 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.

One of the most important steps to making sure your project qualifies is talking to your contractor at the beginning of the project. 

Keep in mind that the 25C tax credit is designed to incentivize high-efficiency equipment. Specifically, your weatherization components, such as insulation, doors, windows, skylights, or air sealing materials must be new and have an expected lifespan of at least five years. Doors, windows, and skylights must meet the ENERGY STAR Most Efficient certification requirements. Insulation and air sealing materials or systems must meet International Energy Conservation Code (IECC) standards.

Efficiency standards and ratings can be difficult to evaluate, so your best bet is to ask your contractor or energy auditor if your project qualifies for the 25C tax credit. Some manufacturer websites list tax credit eligible equipment, as does the ENERGY STAR Product Finder

For more on the efficiency requirements of other purchases, see this IRS FAQ.

  1. Keep track of (or track down) the invoice from your contractor. 

  2. 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.

  3. Submit the form along with your annual tax return. 

  4. You may enjoy a lower tax bill or bigger refund!

You can claim the standard deduction to 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 weatherization materials in late 2023 but didn’t have them 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.

Go to Incentive Calculator

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