*** Important July 2025 Update: ***
For the past two years, Arizonans have been able to put their faith into action by using home energy incentives to help keep our air clean and combat the climate crisis. Unfortunately, the tax incentives are going away soon, with the recent federal budget approved by Congress and signed into law. If you were planning to use the incentives for household energy efficiency projects, solar, or electric vehicle incentives, you must act now!

What Projects Qualify? (With New Deadlines)

If you’re looking to upgrade to energy-efficiency appliances, purchase an electric vehicle, or undertake home efficiency projects, you may be eligible for one or more of the Clean Energy Tax Credits from the 2022 Inflation Reduction Act (IRA)!

Residential Clean Energy Tax Credit (25D) – Purchase & Install before Dec. 31, 2025

• Solar panels
• Battery storage

Learn more about the Clean Energy Tax Credit at the IRS website.

Energy Efficiency Tax Credit (25C) – Install before Dec. 31, 2025

• Energy efficient appliances
  • Heat pump air conditioner/heater
  • Heat pump water heater
• Improving the building envelope
  • Insulation
  • Efficient windows (including skylights)
  • Exterior doors
• Home energy audits
• Electrical upgrades, when paired with new efficiency equipment.

Learn more about the Energy Efficiency Home Improvement Tax Credit at the IRS website.

Electric Vehicle (EV) Tax Credits – Purchase before Sept. 30, 2025

• Up to $7500 for select new EVs
• Up to $4,000 for select used EVs

Learn more about tax credits for new and used EVs at the IRS website.

Important NEW Considerations

• Many projects require months for permitting and installation. With the tax credit expirations, it is imperative to start shopping now if you think you’d like to do one of these projects, especially solar installations.
• Get multiple bids and inform yourself to ensure you are making a prudent choice.
• Income Note: The 25C and 25D tax credits are non-refundable, meaning you can’t get back more than you pay in federal income tax. The EV tax credit can be transferred to an auto dealer, allowing low-income purchasers to benefit.

Resources

• Solar United Neighbors has information on buying solar, including a Buying Solar 101 Arizona webinar.
• Rewiring America has a “Savings Calculator” that is invaluable for researching your options, including tax credits, utility rebates and state rebates.
• If tax credits won’t work for you, there are other programs, like the Efficiency Arizona program for heat pumps and other energy efficient appliances. Electric utility companies may also offer rebates.

*This information is offered as an introduction only, and not intended as tax advice. 
For questions regarding your tax situation, please consult a tax advisor.

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Still on the fence? Here’s what some of our SAGE Team leaders have to say about using IRA tax credits to lower their utility bills: