‘Use it or lose it’: These clean-energy tax credits will be gone soon

Canary Media’s ​“Electrified Life” column shares real-world tales, tips, and insights to demystify what individuals can do to shift their homes and lives to clean electric power. 

Have you been sitting on the sidelines, waiting to decarbonize your home and commute?

It may be time to jump into action.

The ​“Big, Beautiful Bill” that President Donald Trump signed on July 4 sets early expiration dates for a slew of federal tax credits that have made it easier for millions of Americans to switch to clean and typically cheaper-to-run electric appliances and EVs, make efficiency upgrades to their homes, and put solar panels on their roofs. After the end of the year — and even sooner for EVs — none of those incentives will be available.

“We’re at a ​‘use it or lose it’ point,” said Skip Wiltshire-Gordon, director of government affairs for policy strategy firm AnnDyl Policy Group. He’s encouraging people to start talking to contractors to figure out which upgrades make sense for them and to get on installers’ schedules.

Besides improving indoor air quality, switching to a heat pump lowers energy bills by hundreds of dollars for the majority of households, according to electrification nonprofit Rewiring America. Savings climb still higher by installing heat-pump water heaters and rooftop solar. These benefits are especially salient as utility bills rise nationwide, a trend that experts expect the new law to exacerbate.

In addition to the tax credits, households may also be able to access federal home-energy rebates, depending on their state; that Biden-era program was untouched by the new legislation.

Here’s a run-through of the federal incentives that are, for now, available to help you electrify your life.

Upgrade your home

The Energy-Efficient Home Improvement Credit (25C) can get you up to $2,000 off your federal taxes for a qualifying heat-pump heater/​air conditioner or heat-pump water heater, and separately, up to $1,200 on other energy-efficient upgrades, including insulation and air-sealing materials, windows, and exterior doors. The credit will even help you pay for an energy audit to diagnose your home’s biggest upgrade opportunities. You can claim a total of $3,200 this year. Under previous law, the credit renewed annually, so before the ​“Big, Beautiful Bill,” you could claim it every year until 2033. No longer. Expires: Dec. 31.

Upgrade your ride

The New Clean Vehicle Credit (30D) can get you $7,500 off your federal tax bill for a brand-new, qualifying EV model. However, your household must earn less than $300,000 for married couples filing jointly, or $150,000 for single filers. You can get the discount on-site when you make your purchase. Expires: Sept. 30.

The Used Clean Vehicle Credit (25E) can lop up to $4,000 off your federal tax bill for qualifying pre-owned EVs. The income maxima are half of those for 30D: $150,000 for married couples filing jointly and $75,000 for single filers. You can get the discount right at the dealership. Expires: Sept. 30.

The Commercial Clean Vehicle Credit (45W) of up to $7,500 can’t be claimed by consumers directly but still gives them a fiscal advantage. Auto dealers are able to take the federal tax credit themselves and pass on the savings to leasing customers. Called the EV ​“leasing loophole,” the credit can be used for vehicles that don’t meet the stringent requirements needed to claim 30D. Expires: Sept. 30.

Here’s a summary table to easily look up what the tax credits cover: