ExpiredLast verified: 2026-07-19

Section 25D Residential Clean Energy Credit (Expired)

Save up to

Was 30% of costs (no annual cap)

Provider

Internal Revenue Service (IRS) / U.S. Federal Government

The Section 25D Residential Clean Energy Credit provided a 30% federal tax credit with no annual dollar cap for residential clean energy systems — including solar panels, wind turbines, geothermal heat pumps, battery storage, and fuel cells. Unlike the 25C credit which had annual caps, 25D had no limit on total savings. EXPIRED as of December 31, 2025 due to the One Big Beautiful Bill Act. Homeowners who installed systems before expiration can still claim the credit, and unused credit from prior years can be carried forward to future tax returns.

✓EXPIRED — No longer available for systems placed in service after December 31, 2025
✓Was available to U.S. taxpayers for residential property they owned (primary or secondary home)
✓Equipment must have been installed and operational by December 31, 2025
✓Credit was 30% of total costs with NO annual dollar cap or aggregate lifetime limit
✓Unused credit from prior installations CAN be carried forward to future tax years
✓Was a nonrefundable credit — reduced tax owed but could not generate refund (excess carried forward)
✓Rental properties did NOT qualify — must be taxpayer's residence

How to Apply

1If you installed a qualifying system BEFORE December 31, 2025, file IRS Form 5695 with your 2025 return
2Part I of Form 5695 covers the 25D (Residential Clean Energy) credit
3If you have UNUSED credit from a prior year installation, carry it forward on your current-year Form 5695
4Keep all receipts, invoices, and proof of installation date
5For solar: keep interconnection agreement and PTO (Permission to Operate) documentation
6Credit can be carried forward indefinitely until fully used
7For NEW installations in 2026+: SMUD offers up to $10,000 for battery storage; SGIP provides $200-$1,100/kWh for batteries in PG&E territory

Qualifying Equipment & Services

●Rooftop solar photovoltaic (PV) panels — no cap on credit amount
●Solar water heating systems (must supply 50%+ of hot water)
●Residential wind turbines (small wind energy systems)
●Geothermal heat pump systems
●Battery storage systems (minimum 3 kWh capacity) — added by IRA in 2023
●Fuel cell systems (limited to $500/0.5 kW capacity)
●Installation labor, wiring, and mounting hardware all qualified

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Frequently Asked Questions

Is the 25D solar tax credit still available in 2026?+

No. The Section 25D Residential Clean Energy Credit expired December 31, 2025. Solar panels and other clean energy systems installed after this date do not qualify. However, if you have unused credit from a pre-2025 installation, you can still carry it forward on future tax returns.

Can I carry forward unused 25D credit?+

Yes. If your 25D credit exceeded your tax liability in a prior year, the unused portion carries forward to future tax years indefinitely. File Form 5695 each year to apply the carryforward until it's fully used.

What happened to the solar tax credit?+

The IRA originally extended the 30% solar credit through 2032, then stepped it down to 26% (2033) and 22% (2034). The One Big Beautiful Bill Act eliminated it entirely effective December 31, 2025. There is currently no federal solar tax credit for new installations.

What alternatives exist for battery storage in 2026?+

SMUD offers up to $10,000 for battery storage systems. PG&E territory qualifies for SGIP (Self-Generation Incentive Program) at $200-$1,100/kWh depending on eligibility tier. Equity/low-income customers get the highest incentives.

I installed solar in 2024 but haven't filed yet. Can I still claim?+

Yes! You can claim the 25D credit for any qualifying system placed in service before December 31, 2025. File an amended return (Form 1040-X) with Form 5695 if you missed it on your original filing.