After the 25C and 25D Credits: Tennessee Energy Upgrades

For three tax years, a lot of Middle Tennessee energy projects were sold with a line like "and you'll get 30% back from the IRS." For work done in 2026, that line is outdated. The IRS pages for both federal home energy credits now say they don't apply to property placed in service after December 31, 2025. Here's what ended, what didn't, and how to rethink a project without them.

This is general information, not tax advice. Talk with a tax professional about your own return.

What the IRS says now

Energy Efficient Home Improvement Credit (Section 25C). The IRS says you can claim it for improvements made through December 31, 2025. While it ran, the IRS describes it as 30% of qualified costs, up to $3,200 a year:

• up to $2,000 a year for qualifying heat pumps, heat pump water heaters and biomass stoves or boilers;
• up to $1,200 a year for other items, with sub-limits of $600 for windows and skylights, $250 per door ($500 total) and $150 for a home energy audit.

For 2025 property, the IRS also required the item to come from a qualified manufacturer, with its qualified manufacturer identification number (QMID) reported on the return.

Residential Clean Energy Credit (Section 25D). This was 30% of the cost of solar panels, battery storage, geothermal heat pumps and similar property. The IRS says it's not available for any property placed in service after December 31, 2025.

If you finished work in 2025

You may still be able to claim it on your 2025 return, if the work qualified and was completed (placed in service) in 2025. Keep:

• invoices showing the install date;
• the manufacturer's certification and, for 2025, the QMID for each item;
• receipts separating labor from equipment where that matters.

If a contractor finished in January 2026, the IRS wording suggests it doesn't qualify. Ask your tax preparer.

What changes for 2026 decisions

Re-run the payback. Take a hypothetical $16,000 heat pump. With the old $2,000 credit, it was effectively $14,000. Now it's the full price minus any utility rebate. Get updated quotes and run the numbers on your actual bills.

Ignore "sign now before the credit expires." It already did. A contractor still using that pitch in 2026 is either behind or hoping you are.

Windows. The 25C window sub-limit was only $600 a year, so the credit never covered much of a window project, and now it covers nothing. Replace windows when they've failed or when you want the look and comfort. Don't count on energy savings to pay for them. See windows.

Solar math is different. Without the 30% 25D credit, rooftop solar takes longer to pay back. If you're re-roofing, it's still sensible to plan conduit and roof layout for future panels. See roofing.

What's still available in Middle Tennessee

TVA EnergyRight rebates. Through your local power company, TVA EnergyRight lists rebates of $800 for a 17+ SEER2 heat pump ($500 for 15–16.99 SEER2), $800 for a ductless mini split, $1,500 for geothermal, $900 off a heat pump water heater, and $300 each for attic insulation, wall insulation, air sealing and duct sealing. A TVA Quality Contractor Network member has to do the work. Details are in our TVA rebate guide.

TVA Home Uplift. TVA says Home Uplift provides an average of $10,000 in free energy upgrades to income-eligible customers of participating power companies.

Weatherization Assistance Program. Tennessee Housing Development Agency (THDA) runs the federal weatherization program through local agencies in all 95 counties, depending on available funding, for low-income households.

Both are covered in our Home Uplift and weatherization guide.

Upgrades that still pay off without a credit

In Middle Tennessee's hot summers and cold snaps, the cheapest improvements are usually the boring ones:

• air sealing and attic insulation, each with a TVA rebate;
• duct sealing, especially for ducts in attics or vented crawl spaces;
• right-sizing HVAC when it's replaced, after the envelope work;
• a heat pump water heater when the old one fails.

See HVAC for system choices and costs.