With the passing of the One Big Beautiful bill extending the duration of certain tax provisions, there are still a few from the 2017 Tax Cuts and Jobs Act that will sunset after 2025. These credits, especially those for clean energy, home upgrades, and electric vehicles, are being phased out much faster than expected. Understanding these deadlines and planning accordingly could make a big difference in your tax savings.

Clean Energy Tax Credits

The majority of the tax provisions that are set to end after 2025 are the different clean energy credits that were introduced in the 2017 Tax Cuts and Jobs Act.

Residential Energy Credit

The residential clean energy credit is one of the tax credits set to be terminated. The residential energy credit made it so equipment like solar panels, solar water heating, wind turbines, geothermal heat pumps, and battery storage could be deducted up to 30% of their costs. However, after December 31, 2025, the max credit will no longer be 30% and will be phased out with 2034 being the last year where a credit can be made with an amount of 22% of the cost for the qualified equipment. In other words, while there still will be time to get the full benefits of the residential energy credit, it is best to have equipment like solar panels installed on a place of residence before December 31, 2025.

Vehicle Credits

There are many tax credits for vehicles that are set to be phased out or sunset in 2025. The notable credits set to sunset are:

Previously Owned Vehicles Credit:

The credit allowed for any previously owned electric cars that cost less than $25,000 to be able to reduce your taxes by 30% of their sales price, but only up to a maximum of $4,000. This credit ended on September 30, 2025, due to the One Big Beautiful Bill increasing the pace of the phase-out of certain credits.

New Clean Vehicle Credit:

The clean vehicle credit allowed for up to $7,500 to be reduced from your total amount owed, provided that you meet the critical minerals and battery component requirements. If only one requirement is met, then only half can be taken. This credit also expired on September 30, 2025, and any electric vehicles purchased after will not qualify for the credit.

Credit for qualified commercial clean vehicles:

This credit is for any qualified commercial clean vehicle and allows a maximum credit of $40,000 to be taken. However, like most of the vehicle energy credits, it expired on September 30, 2025, meaning that any commercial clean vehicle purchased after that date will not qualify for the credit.

Home Energy Credits

While not as numerous as the vehicle credits that are set to sunset, there is 1 notable credit that will soon expire and should be taken advantage of beforehand.

Energy-efficient home improvement credit:

2025 The credit allowed for up to $1,200 for any qualifying energy-efficient improvements to be reduced from your taxes for every year an energy improvement is made. Items like exterior doors, windows, skylights, or insulation and air sealing systems are all improvements that can be claimed under the credit, provided they meet the Energy Star requirements or the International Energy Conservation Code standards. This credit will expire at the end of 2025. To claim the credit on your 2025 income tax return, improvements will need to be produced by a “qualified manufacturer” and the manufacturer must provide a PIN for the item.

2026 This credit also has a separate dollar limitation for qualified heat pumps, water heaters, and biomass stoves. The credit amount is $2,000, which also expires on December 31, 2025

Conclusion

The credits mentioned above are only some of the energy credits that are set to sunset in 2025. From a tax planning perspective, it would be beneficial to make purchases now to take advantage of these credits before many of them expire. Please don’t hesitate to consult your tax professional before the end of the year to see what credit you might be eligible for.

Contact Us Today

Taking advantage of these soon-to-expire energy tax credits could significantly enhance your savings before the 2025 deadlines. Call us at 203-489-0612 to discuss which credits you may still qualify for and how to make the most of them.

Written by: Tyler Goncalves