Are Clean Energy Tax Credits Going Away This Year?

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Many people seek out and use clean energy tax incentives, but that might be history soon. A new tax law signed by President Trump on July 4, 2025, will eliminate many federal energy-efficient tax benefits, including electric vehicle (EV), solar panel, and clean energy home improvement credits.

According to the Kelley Blue Book, a record-breaking 1.3 million EVs were sold in the U.S. last year, with 87% taking advantage of the federal tax credit. Meanwhile, the U.S. Treasury Department reports that over 3.4 million households have received $8.4 billion in tax credits for energy efficiency upgrades.

But the GOP’s so-called “One Big Beautiful Bill” might end affordability for many who wanted to use clean energy tax incentives.

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Which credits will be eliminated? And in what ways might you still “go green” when the tax breaks do disappear?

Read on.

Clean energy tax credits in the new Trump tax bill

During the Biden presidency, many clean energy tax credits were created, expanded, or extended under the Inflation Reduction Act (IRA).

As a result of that legislation, the federal government offered several tax credits promoting energy efficiency:

The electric vehicle (EV) tax credit, worth up to $7,500 for new qualifying “clean vehicle” EVs.
The previously-owned clean vehicle credit, worth up to $4,000 or 30% of the sales price (whichever is less), for used EVs.
The alternative fuel vehicle refueling property credit, also called the “EV charger tax credit,” worth up to 30% of the cost of qualifying “green” equipment (maximum $1,000).
The energy efficient home improvement credit, worth up to $3,200 on qualifying items like doors, windows, and natural gas heat pumps.
The residential clean energy credit, worth up to 30% of qualifying expenditures, like solar panels.

…there were also various other energy credits included in the IRA.

Together, those tax breaks have helped many Americans afford to “go green” and cut their tax bills when installing certain energy-efficient home upgrades.

Most IRA-sponsored clean energy initiatives were initially set to expire at the end of 2032. However, under the new Trump tax bill, key provisions could be eliminated as early as September 30, 2025.

Energy bill cost when tax credits go away

Tax incentives help people afford clean energy upgrades like solar panels and EVs. By eliminating energy tax breaks, fewer people may obtain the benefits they offer, like lower energy bills.

According to a recent analysis by Energy Innovation, a non-partisan policy firm, repeal of federal clean energy tax credits could make electricity bills rise across the U.S.

The average American household could see an increase in its annual energy bill of:

About $40 to $60 by 2030
By about $56 to $150 in 2035
And about $140 to $220 in 2040

In total, repealing these tax credits could cost taxpayers $6 billion annually over the next five years. By 2040, American households could lose $25 billion per year.

Notably, that analysis doesn’t include any current or potential Trump tariffs.

Parts for clean energy initiatives, like EVs and solar panel pieces, are typically made abroad in countries like Mexico and China.

When a tariff war occurs, as happened earlier this year (and continues to progress), consumers generally pay the price.

Consequently, energy-efficient tax breaks would be needed to combat raised prices from tariffs on imported energy products.

Otherwise, the hit to energy incentives would be twofold: Raised prices from tariffs, and elimination of tax credits that could have helped absorb the higher prices.

‘Go green’ clean energy ideas: Rebates and state tax programs

While many clean energy initiatives are under fire under Trump's tax plan, there are ways you may be able to “go green” even when the elimination of energy tax credits occurs:

Apply for the High-Efficiency Electric Home Rebate Program, which offers qualifying homeowners rebates on stoves, heat pump water heaters, electric wiring, and more.
Check out the Low Income Home Energy Assistance Program (LIHEAP), which helps eligible households pay heating or cooling bills.
Regularly schedule maintenance on your HVAC, purchase “smart” energy usage appliances, or look around your interiors for potential air leaks in windows, doors, or attics. Timely repairs may save you up to 15% on heating and cooling costs, according to Energy Star.

Finally, check your state’s Department of Revenue website for energy-related tax credits or rebate programs. Several states have decided to stand against potential federal reform on the clean energy front.

For example, California Gov. Gavin Newsom announced last year that if the EV tax credit is eliminated, the Golden State might provide rebates for eligible EV purchases.

States like New Mexico and North Carolina have also set goals for 100% clean energy by 2045 and 2050, respectively.

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Kate is a CPA with experience in audit and technology. As a Tax Writer at Kiplinger, Kate believes that tax and finance news should meet people where they are today, across cultural, educational, and disciplinary backgrounds.