Form 5695 is the IRS form you use to claim the two residential energy credits: the residential clean energy credit (Part I) and the energy efficient home improvement credit (Part II). For 2025 returns both credits are 30%. The big change: the 2025 instructions say you can't claim either credit for expenditures made or property placed in service after December 31, 2025, so 2025 is the last year to claim new work.
If you put in solar panels, a heat pump, new windows or insulation during 2025, this is the form, and you're in the last group who can use it for new spending. Everything below comes from the IRS Instructions for Form 5695 (2025), checked in October 2026.
The two credits side by side
| Residential clean energy credit (Part I) | Energy efficient home improvement credit (Part II) | |
|---|---|---|
| What it covers | Solar electric, solar water heating, small wind, geothermal heat pump, battery storage and fuel cell property | Insulation, exterior doors, windows, central air, water heaters, furnaces, heat pumps, electrical panel upgrades, home energy audits |
| Rate for 2025 | 30% | 30% |
| Limits | Fuel cell property is limited to $500 for each one-half kilowatt of capacity | Annual limits by category, see the next table |
| Unused credit | Can carry forward to 2026 | Not covered by the carryforward line |
| Homes | Existing homes and homes being built | Existing homes only |
| Ends | Expenditures made after December 31, 2025 | Property placed in service after December 31, 2025 |
The 2025 limits for the home improvement credit
Part II has an annual cap rather than the old lifetime limit, with separate caps inside it, as of October 2026:
| Item | Credit limit |
|---|---|
| Most qualifying improvements combined | $1,200 a year |
| Any single qualified energy property item | $600 |
| All exterior windows and skylights combined | $600 |
| Any one exterior door / all exterior doors | $250 / $500 |
| Home energy audits | $150 |
| Heat pumps, heat pump water heaters, biomass stoves and boilers | $2,000, a separate annual limit |
That last line is the one to notice. The heat pump group sits outside the $1,200 cap, so a year with a heat pump and new windows can earn more than $1,200 in total.
The 2025 rule that trips people up: the QMID
Beginning January 1, 2025, if you're claiming the energy efficient home improvement credit for specified property placed in service in 2025, you must include the four-character qualified manufacturer identification number (QMID) for each item. If your installer's paperwork doesn't show it, ask for it before you file, because the line can't be completed without it.
Home energy audits have their own condition: since January 1, 2024, the audit must be done by, or supervised by, a Qualified Home Energy Auditor certified by a Qualified Certification Program.
How to claim it
- Confirm the home: for Part II it must be an existing home in the United States that you lived in during 2025. A house, condo, co-op, houseboat or qualifying manufactured home all count.
- Collect invoices showing the cost and the date installation was completed. Costs are treated as paid when the original installation is completed.
- Subtract any subsidized energy financing, because those amounts can't be used to figure the home improvement credit.
- Complete Part I for clean energy property, including any carryforward from 2024, and Part II for home improvements, entering each QMID.
- Reduce your home's cost basis by the credit you're allowed, as the instructions require.
- Attach Form 5695 to your 2025 return.
If you already filed a 2025 return and left the credit off, you can claim it by amending with Form 1040-X. If you need more time to chase QMIDs or invoices, an extension with Form 4868 gives you more time to file, though not more time to pay.
Common mistakes on Form 5695
- Claiming Part II for a newly built home. The instructions say the home improvement credit is only for existing homes, so line 17e asks the question directly.
- Leaving out the QMID for 2025 property. Without it the line can't be completed.
- Using the date you paid a deposit instead of the date installation was completed.
- Forgetting to subtract subsidized energy financing, or a utility subsidy, before working out the credit.
- Counting a heat pump inside the $1,200 cap and losing part of the separate $2,000 limit.
- Not reducing your home's basis by the credit you were allowed.
Keep the invoices, the installer's QMID details and any audit certificate with your tax records. If the IRS questions the claim, those are the documents that prove it.
If you live in a condominium or a cooperative, there's a new checkbox for 2025 to show you have a fractional share of the qualifying costs. Members of a condo management association, or tenant-stockholders in a housing co-op, are treated as having paid their proportionate share of the association's or co-op's costs, so ask the board for your share of any qualifying work.
What happens in 2026
For work done in 2026, there's no new credit to claim on either part, according to the 2025 instructions. The one thing that carries on is the residential clean energy credit carryforward: if your 2025 clean energy credit was bigger than your tax, the unused part can be carried to 2026 on Form 5695.
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The verdict
If you paid for qualifying energy work in 2025, claim it on your 2025 return and don't leave it to chance: get the QMID for every item, keep the invoices, and check the heat pump cap separately from the $1,200 one. If you're planning a project now, budget without the federal credit, because the 2025 instructions say it isn't there for spending after 2025.
Electric cars had a credit of their own, and our clean vehicle credits guide explains the cutoff.
Frequently asked questions
What is Form 5695 used for?
It's used to figure and claim the residential clean energy credit and the energy efficient home improvement credit.
Can I claim the energy credits for work done in 2026?
No. The 2025 instructions say neither credit can be claimed for expenditures made or property placed in service after December 31, 2025.
What is the maximum energy efficient home improvement credit?
Generally $1,200 a year, plus a separate $2,000 annual limit for heat pumps, heat pump water heaters, biomass stoves and biomass boilers.
What is a QMID on Form 5695?
A four-character qualified manufacturer identification number you must include for each item of specified property placed in service in 2025.
Can I carry forward an unused energy credit?
The residential clean energy credit can be carried forward, and Form 5695 is used to carry the unused part to 2026.
Does the home improvement credit apply to a new home?
No. The instructions say the energy efficient home improvement credit is only available for existing homes.
