Updated October 18, 2026. Quick answer: Form 5695 figures two residential energy credits: the residential clean energy credit in Part I and the energy efficient home improvement credit in Part II. The 2025 instructions say you cannot claim the clean energy credit for expenditures made after December 31, 2025, or the home improvement credit for property placed in service after that date, so a 2025 return is the last year either credit is available. Part I still carries an unused clean energy credit into 2026.
IRS worksheets read line by line: Schedule 8812 Credit Limit Worksheet A and Schedule 8812 Credit Limit Worksheet B.
More IRS forms and schedules for individual filers, read line by line: Form 8839 Part II adoption credit and Form 8911 instructions.
Quick reference
| Item | As printed on the 2025 form and instructions |
|---|---|
| Part I credit rate | 30% of qualified costs (property placed in service 2022 through 2025) |
| Part II credit rate | 30% of qualified costs, subject to the annual limits below |
| Last date for either credit | December 31, 2025 |
| Unused Part I credit | Carried to 2026 on line 16 |
| Where the totals go | Schedule 3, line 5a (Part I) and line 5b (Part II) |
The two credits and the end date
The instructions name them: “The residential energy credits are:” the residential clean energy credit and the energy efficient home improvement credit. The What’s New box gives the end date: “You can’t claim residential clean energy credits for expenditures made after December 31, 2025.” “You can’t claim energy efficient home improvement credits for expenditures or property placed in service after December 31, 2025.”
The 2026 Form 1040-ES repeats it for people planning ahead. Its credits instruction lists these as credits that cannot be claimed in 2026: “Credit for energy efficient home improvements.” “Credit for residential clean energy systems.” Our page on Schedule 3 lines 5a and 5b shows where the two totals land on Form 1040.
Part I: the residential clean energy credit
Part I is a flat percentage. The instructions say “You may be able to take a credit of 30% of your costs of qualified solar electric property, solar water heating property, small wind energy property, geothermal heat pump property, battery storage technology, and fuel cell property.” The same sentence covers labor: “Include any labor costs properly allocable to the onsite preparation, assembly, or original installation of the residential clean energy property”.
Two conditions are easy to miss. Battery storage must meet a size test: “To qualify for the credit, the qualified battery storage technology must have a capacity of at least 3 kilowatt hours.” Fuel cells have a dollar cap: “The credit amount for costs paid for qualified fuel cell property is limited to $500 for each one-half kilowatt of capacity of the property.”
The credit can exceed your tax in a given year. If it does, “you can carry the unused portion of the credit to 2026.” The form’s line 16 is “Credit carryforward to 2026.” The instructions add “File this form even if you can’t use any of your credit in 2025.”
Part II: the energy efficient home improvement credit
Part II also pays 30%, but with annual dollar limits. The instructions say “You may be able to take a credit equal to 30% of the sum of:” qualified energy efficiency improvements, residential energy property costs and home energy audits. The limits are:
| Category | Limit, as printed in the 2025 instructions |
|---|---|
| Energy efficient home improvement credit, total | “A total combined credit limit of $1,200 for qualified energy property.” |
| Any one qualified energy property item | “A credit limit of $600 for any qualified energy property item.” |
| Exterior windows and skylights | “A combined credit limit of $600 for all exterior windows and skylights.” |
| Exterior doors | “A credit limit of $250 for any qualifying exterior door and $500 total for all qualifying exterior doors.” |
| Heat pumps, heat pump water heaters, biomass | “A combined credit limit of $2,000 for heat pump and heat pump water heaters; biomass stoves and boilers.” |
| Home energy audit | “A credit limit of $150 for home energy audits.” |
The Section A building envelope improvements apply only to your main home. The instructions say they must be “installed on or in your main home that you owned during 2025 located in the United States” and “the original use of the component begins with you”. The credit also needs a product number for specified items: “For exterior doors, windows, and skylights installed in 2025, a valid QMID must be reported on the applicable line(s).”
Tax limits, shared homes and basis
Both credits are limited by your tax. The Part I worksheet starts from Form 1040 line 18 and subtracts other credits, and the instructions say to “Subtract line 2 from line 1.” If you share a home, “each occupant must complete their own Form 5695.” Condominium and cooperative owners check the fractional-share box on line 32b.
There is a basis effect too: “You must reduce the cost basis of your home if a residential energy credit is allowed for any expense for any property.” And a utility subsidy reduces what you can claim: “you must reduce your cost for the product by the amount of that subsidy before you figure your credit.”
The edition read for this page is the 2025 Form 5695 and the 2025 Instructions for Form 5695 (catalog number 66412G, dated January 22, 2026), which are the revisions irs.gov served when they were read on 2026-10-18. They cover property placed in service or paid for in 2025. Check the revision printed on the form you file, because a later revision can change the lines, the limits and the credits it covers.
Common mistakes
- Assuming the credits continue into 2026. The instructions end the clean energy credit for expenditures after December 31, 2025 and the home improvement credit for property placed in service after that date.
- Leaving off the product identification number. For specified property placed in service in 2025, each item needs its four-character QMID, and a manufacturer’s certification is kept, not attached.
- Skipping the form when the credit exceeds your tax. The instructions say to file Form 5695 even if you cannot use any of the credit in 2025, so the unused Part I credit carries to 2026.
- Forgetting to reduce the home’s basis by the credit that was allowed.
Related: Schedule 3 lines 5a and 5b, Schedule 2 energy credit recapture, and Form 1040-ES instructions.
Sources
- 2025 Instructions for Form 5695, Residential Energy Credits: https://www.irs.gov/pub/irs-pdf/i5695.pdf
- 2025 Form 5695, Residential Energy Credits: https://www.irs.gov/pub/irs-pdf/f5695.pdf
- 2026 Form 1040-ES, Estimated Tax for Individuals: https://www.irs.gov/pub/irs-pdf/f1040es.pdf
Read from the IRS documents linked above on October 18, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.