Quick Guide To IRS Form 5695 for Renewable Energy Credits in 2025
- Hanna Kielar
- Oct 24
- 5 min read
Updated: Nov 19
Table of Contents:
You made the smart decision to install a solar system in 2025—now it’s time to make sure you get the full benefit of the Federal Solar Tax Credit. This credit can significantly reduce your tax bill, but to claim it, you’ll need to complete IRS Form 5695 when you file your taxes.
Form 5695Â is used to claim residential energy credits, including the 30% solar tax credit, which helps offset the cost of your solar installation. Filling it out correctly ensures you receive the maximum savings available.
Not sure where to start? Don’t worry—we’ll walk you through what IRS Form 5695 for 2025 includes, what information you’ll need, and how to properly claim your credit. Let’s make sure you get the most out of your clean energy investment.
What Is IRS Form 5695 and How Does It Apply to Residential Energy Credits?
IRS Form 5695 is the paperwork you file with your income taxes to take advantage of the financial incentives of going green. The Form 5695 worksheet is for calculating and claiming non-business energy property credits or residential energy-efficient property credits.
This form isn’t just for the solar tax credit—it also covers geothermal heat pumps, wind turbines, fuel cells, solar water heating systems, and biomass energy systems. The IRS provides Form 5695 instructions to ensure taxpayers correctly complete the form and maximize their renewable energy tax benefits.
How To Fill Out Form 5695 for 2025 (Step-by-Step)
To claim the Residential Clean Energy Credit, follow these steps when completing IRS Form 5695 for 2025. Using the official Form 5695 instructions will help ensure your filing is accurate and that you maximize your residential energy credits.
✅ Step 1: Verify Eligibility
Review the checklist in IRS Form 5695Â to confirm that your solar panel system or other home energy upgrades qualify for the tax credit.
✅ Step 2: Gather Required Information
Before filling out the form, collect these details:
Gross cost of your solar panel system – Include panels, inverters, racking, labor, and permitting fees. Subtract any rebates, state credits, or incentives.
Related home upgrade costs – Expenses for upgrades like a new electrical panel may also qualify. Ask your installer for an itemized breakdown.
Tax credit limits – On page 4 of Form 5695 residential energy credits, calculate the maximum credit you can claim for 2025.
✅ Step 3: Include Other Qualifying Expenses
Be prepared to enter information about additional eligible expenses, which may impact your total credit. These can include:
Solar battery storage systems (minimum 3 kWh capacity)
Energy-efficient home improvements (doors, windows, insulation, heat pumps, etc.)
Purchases of a battery-electric vehicle (BEV) or plug-in hybrid electric vehicle (PHEV)
Carryover credits from prior years if you were unable to claim the full amount previously
✅ Step 4: Complete and File Form 5695
Use the Form 5695 instructions for 2025Â to calculate your total residential energy credits. Transfer the final credit amount to your federal tax return (Form 1040). Keep receipts, invoices, and manufacturer certifications in your records in case the IRS requests verification.
Form 5695 Instructions: How to Calculate Your Renewable Energy Credits
The official IRS Form 5695 instructions outline three basic steps for homeowners:
Confirm eligibility for the Residential Clean Energy Credit or the Energy Efficient Home Improvement Credit.
Enter your qualified expenses, such as solar panels, inverters, labor, and related upgrades, on the correct lines of the form.
Calculate and transfer your total credit to your federal tax return (Form 1040).
Always keep receipts, manufacturer certifications, and installer documentation in case the IRS requests verification.
What Qualifies For Form 5695 Renewable Energy Credits in 2025?
IRS Form 5695 allows homeowners to claim Residential Energy Credits for various clean energy upgrades beyond solar panel systems. Eligible improvements for 2025 include:
Renewable Energy Systems (30% Tax Credit)
Solar panel systems (including panels, inverters, racking, labor, and permitting)
Solar water heaters (must be certified by the Solar Rating and Certification Corporation (SRCC))
Battery storage systems (must have at least 3 kWh capacity)
Small wind energy systems
Geothermal heat pumps (must meet ENERGY STAR® requirements)
Fuel cells (limited to $500 per 0.5 kW capacity)
Energy-Efficient Home Improvements (Up to $3,200 in Credits Per Year)
ENERGY STAR® certified appliances, including:
Natural gas, propane, and oil water heaters
High-efficiency furnaces
Electric or natural gas heat pumps
Exterior doors (must meet ENERGY STAR® standards) – up to $250 per door, $500 max
Exterior windows and skylights – up to $600
Insulation and air sealing materials (installation costs not included)
Energy-efficient roofing materials (installation costs not included)
Home energy audits – 30% of cost, up to $150
Carry-Over Credit for Previous Years
If you installed solar panels or other clean energy upgrades in a previous tax year but did not claim the full credit due to insufficient tax liability, you may carry over the remaining credit to future years.
To maximize your savings and understand all eligible upgrades, consult a tax professional. Also, other programs may provide incentives for energy efficiency and cost savings, complementing the benefits of IRS 5695.
The Energy Efficient Home Improvement Credit
The Nonbusiness Energy Efficient Property Credit was expanded and renamed the Energy Efficient Home Improvement Credit, offering enhanced benefits for homeowners from 2023 through 2032. Here's how it works, with references to IRS 5695Â for claiming the credit:
Nonbusiness Energy Efficient Property Credit (2022)
For expenses incurred in 2022, homeowners could claim a 10% tax credit, with a lifetime cap of $500 for most items. Specific limits include:
Doors: $200 cap
Coverage: Installation and purchase costs for energy-efficient HVAC systems, water heaters, and biomass stoves, plus the purchase of energy-saving doors, windows, skylights, insulation, and roofing materials (installation costs excluded).
Energy Efficient Home Improvement Credit (2023–2032)
The Energy Efficient Home Improvement Credit, claimed through IRS Form 5695 for 2025, covers 30% of qualifying expenses up to an annual cap of $1,200. This credit replaced the previous $500 lifetime limit and supports a wide range of residential energy efficiency upgrades.
Qualifying improvements include:
ENERGY STAR® certified appliances
High-efficiency insulation, doors, and windows
Electric and natural gas heat pumps
Biomass stoves and boilers
Starting in 2025, some products must have a manufacturer-issued product identification number (PIN) to qualify. Be sure to follow the latest Form 5695 instructions to ensure eligibility and proper documentation. Using IRS Form 5695, homeowners can maximize their residential energy credits while improving energy efficiency and reducing utility costs.
Overview Of The Federal Solar Tax Credit Using IRS 5695
In July 2025, new legislation confirmed that the residential solar tax credit will officially end after December 31, 2025. To receive the full 30% Residential Clean Energy Credit, homeowners must have their solar systems fully installed and commissioned before the end of the year. This credit can be claimed by filing IRS Form 5695 for 2024 or 2025, depending on the project’s timing.
The solar tax credit form is used to claim residential energy credits, directly reducing your tax bill instead of just lowering taxable income. If your credit exceeds your tax liability, any unused portion may be carried forward, though this provision may be phased out alongside the credit.
Whether you're a solar contractor looking for fast, code-compliant permit plan sets or a homeowner in need of expert solar repairs or upgrades, GreenLancer has you covered. Our U.S.-based team and nationwide network of licensed professionals deliver reliable support for every stage of your solar projects.
