The Trump administration’s One Big Beautiful Bill Act (yes, that is its formal title), which was passed by the U.S. House of Representatives last month, proposes to “modify, phase out, and terminate multiple energy-related federal tax credits,” according to the bill’s summary, under the subsection “Make America Win Again.”

The patent cruelties embedded in this bill have the potential to decimate livelihoods and economies for a generation or more, not to mention cost actual lives. Setting aside many of the bill’s controversial proposals, like cuts to Medicare and Medicaid benefits, a 10-year moratorium on any state-led efforts to regulate AI models, and repealing EPA block grants that benefit disadvantaged communities, among others, the Big Beautiful Bill (BBB) is particularly preoccupied with getting rid of all manner of tax credits that, to date, have helped millions of builders and homeowners save money and live in healthier buildings.

If passed by the Senate in its current form, which for the time being seems unlikely, the BBB would gut most key provisions in the Inflation Reduction Act (IRA), effectively killing the law in piecemeal. (I’m already eating my words after declaring last January that “the IRA will not be repealed.” There is a slim chance this will hold true, but I humbly join a cast of millions who clearly underestimated Trump’s appetite for gutting industries and local economies in deep red states and districts, where much of the IRA’s funding has been directed.) So let’s explore just a few of the home-specific tax credits that are on the chopping block, and the possible impacts of them going away.

The Energy Efficient Home Improvement Credit (25C)

The 25C tax credit was first introduced through the Clean Energy Act of 2005. In its original form, it offered homeowners a fixed (and rather modest) credit, with a cumulative lifetime cap of just $500, for upgrading their HVAC equipment, water heaters, insulation, windows, doors, and other critical features. The benefits were minimal, but the implied gesture of incentivizing people to convert to Energy Star appliances and make other energy efficient upgrades was significant, nonetheless.

With the passage of the IRA in 2022, the 25C credit was amended in several ways, all representing marked improvements on previous iterations. For starters, the maximum allowable credits were increased to 30% of qualified expenses, or up to $3,200 per year, including up to $2,000 for heat pumps and related equipment, and $1,200 for other efficiency measures like doors, windows, insulation, and home energy audits. Also of note, the annual credit was extended through the end of 2032, enabling homeowners to plan and phase various home improvement measures over the long term.

Recent figures published by Rewiring America indicate that in 2023, more than $2 billion in credits were claimed, representing tax relief of $880 per household on average. “For every dollar homeowners received through 25C, contractors generated ten dollars in energy-efficient product sales. That kind of return is rare in federal policy,” according to the nonprofit.

Of the millions of households that took advantage of the Energy Efficient Home Improvement Credit, new insulation and air-sealing, as well as new exterior windows, doors, and skylights made up the highest percentages of tax credit claims by category. Interestingly, the installation of water heaters and/or furnaces that use “efficient natural gas, propane, or oil” also made-up sizable portions of claims, which supports the claim made in a joint, bipartisan letter submitted by a group of congressional members that the “25C tax credit is fuel agnostic.” (A co-author of the letter includes Rep. Jason Smith, a Republican representing Missouri’s 8th Congressional District, and notably the chairman of the Ways and Means Committee.)

“Energy-efficient homes are more resilient in extreme weather; energy-efficient homes are healthier homes; and building energy efficiency enables utilities to better manage demands on the electrical grid,” the letter reads. “It is for these reasons that we urge Congress to maintain the current 25C tax credit.”

The Residential Clean Energy Credit (25D)

Like 25C, the 25D tax credit was also introduced as part of the 2005 Clean Energy Act. The 25D credit directly benefits households that install any form of clean, renewable energy for new or existing properties, and applies to both homeowners and renters, provided the home in question is their principal residence. Qualifying expenses include solar panels, solar water heaters, geothermal systems, wind turbines, fuel cells, and starting last year, battery storage equipment.

The initial payback for the 25D credit was comparatively generous, capped at 30% of expenses, including equipment and installation. One possible reason for this is that, unlike insulation and energy efficient windows, renewable energy technologies were mostly out of reach for the average household 20 years ago. Over time, as the marketplace for solar panels and related systems became more accessible, the applicable percentages dropped a few points. But with the arrival of the IRA, the 30% cap was restored to the Clean Energy Credit and extended through the end of 2032. Recent figures from the Treasury Department indicate that in 2023 taxpayers who installed rooftop panels and home battery storage saved an average of nearly $5,100 in credits, while reaping annual savings of $2,230 on their energy bills.

While the 25D credit has greatly benefitted hundreds of thousands of households, particularly when it comes to solar panels (25D is commonly known as the residential solar tax credit), it has also been a boon for solar installers. According to data from the Solar Energy Industries Association (SEIA), in partnership with Wood Mackenzie Power & Renewables, a record 178,812 solar installers and developers were employed in 2023. For the same year, that number increases to nearly 280,000 (another record) when including U.S. manufacturers, sales and distribution, and operations and maintenance workers.

Whatever happens with the BBB, in the likely event the solar tax credit goes away at the end of 2025 as proposed, the recourse is clear: for any homeowners who have even a passing interest in installing solar and battery storage (a process that can take several months), it’s best to do it now. The clock is ticking.

The New Energy Efficient Home Credit (45L)

The 45L tax credit, also established through the Clean Energy Act, had previously expired in 2021. This credit specifically benefits builders of new energy efficient homes of all types, from single-family to manufactured and multifamily buildings. The credit was brought back with the passage of the IRA, and in the process raised credits to $2,500 for single family and manufactured homes that meet specific Energy Star standards based on the year built (e.g., homes built after 2024 must meet standard 3.2).

Meanwhile, homes in those same categories built to the Department of Energy’s Zero Energy Ready Home program qualify for a $5,000 tax credit, while multifamily homes that meet Energy Star’s Multifamily New Construction program may qualify for $2,500 per unit, provided construction workers are paid prevailing wages. And like 25C and 25D, the IRA extended the 45L credit through the end of 2032.

According to a 2025 report released by the American Council for an Energy Efficient Economy (ACEEE), the 45L credit was instrumental in the construction of nearly 350,000 energy efficient homes in 2024. The cumulative effect of this new construction is estimated to cut peak energy demand by 1,800MW by 2032. “We estimate that the discounted energy savings benefits are more than four times the value of the credit,” concludes the report. Should the credit remain in place, which again, doesn’t seem likely, the ACEEE estimates that it “will spur the construction of over three million qualifying homes between now and its scheduled expiration in 2032.”

An accelerated timetable

Shortly after the passage of the Inflation Reduction Act, in 2022, GBA contributor and home contractor Jon Harrod deftly broke down the various benefits and potential complications of the amended tax credits. In his closing he wrote, “The ethical course is to share what we know with customers in a balanced and transparent way, then let them decide how to proceed. Once we get through this awkward launch, the IRA will help us stay busy for years.”

Harrod’s prudence is admirable, but now, unfortunately, somewhat outdated. In the likely scenario that some amended version of the BBB passes this year, some or all the credits mentioned above (as well as others) will either be terminated or phased out, at which point homeowners will have mere weeks to implement the kinds of improvements and upgrades that they’ve been planning for years.

---

Justin R. Wolf is a Maine-based writer who covers green building trends and energy policy. His latest book, House Up on the Hill: The Revolutionary HMTX Headquarters, was just published by Ecotone.