TaxLinx txlnx.com

Residential Energy Credits

There are two residential energy credits but only one is in scope for VITA/TCE including AARP Tax-Aide.

1. Form 5695 Part I Residential Clean Energy Property Credit–Out of Scope
   • Has to do with Solar, fuel cell, geothermal, and battery storage.
2. Form 5695 Part II Energy Efficient Home Improvement Credit (Click the numbered links below for qualifying products.)
   • Section A Energy Efficiency Improvements
     1.  Insulation–basically any insulation or air-sealing materials qualify.  Do not include labor.
     2. Windows and Doors. Do not include labor.
   • Section B Residential Property Expenditures
     1. Air Conditioners
     2. Heat Pump Water Heaters and Natural Gas Water Heaters
     3. Furnaces and Heaters
     4. Air Source Heat Pumps
     5. Panel Boards, Branch Feeders
     6. Home Energy Audits
     7. Biomass stoves and biomass boilers.

For a more thorough overview, try IRS Fact Sheet FS-2025-01