Form 5695, Residential Energy Credits, is used by individual taxpayers to calculate and claim certain residential energy tax credits on their federal income tax return. The form is used to claim the Residential Clean Energy Credit and the Energy Efficient Home Improvement Credit. It is also used to determine any allowable carryforward of unused Residential Clean Energy Credit amounts from prior years.
Claim Residential Clean Energy Credit
Part I of Form 5695 is used to claim the Residential Clean Energy Credit for qualified property installed in a qualifying residence, including:
- Solar electric property
- Solar water heating property
- Small wind energy property
- Geothermal heat pump property
- Battery storage technology
- Fuel cell property (subject to special requirements)
For property placed in service during 2025, the credit is generally 30% of qualified costs, subject to applicable statutory requirements and limitations.
This credit is nonrefundable, meaning it can reduce your tax liability to zero but generally cannot create a refund by itself.
Claim Energy Efficient Home Improvement Credit
Part II of Form 5695 is used to claim the Energy Efficient Home Improvement Credit for qualifying improvements to an eligible home, including:
- Insulation and air-sealing materials or systems
- Exterior windows and skylights
- Exterior doors
- Heat pumps and heat pump water heaters
- Central air conditioners
- Natural gas, propane, or oil water heaters
- Natural gas, propane, or oil furnaces and hot water boilers
- Electrical panel upgrades that meet applicable requirements
- Home energy audits
This credit is subject to annual dollar limits, category-specific limitations, and an overall annual limitation.
The credit is also nonrefundable.
Residential Clean Energy Credit Carryforward
If your allowable Residential Clean Energy Credit exceeds the amount that can be used because of tax liability limitations:
- The unused portion may generally be carried forward to future tax years.
- Form 5695 is used to calculate the carryforward amount.
- The carryforward rules apply only to the Residential Clean Energy Credit and not to the Energy Efficient Home Improvement Credit.
How Form 5695 Is Organized
Part I — Residential Clean Energy Credit
Used to:
- Report qualified clean energy property costs.
- Calculate the allowable credit.
- Apply tax liability limitations.
- Determine any available carryforward from prior years and any unused credit that may be carried forward.
Part II — Energy Efficient Home Improvement Credit
Used to:
- Report qualifying energy-efficient home improvements.
- Apply applicable annual and category-specific limits.
- Calculate the allowable credit for the tax year.
Important Note
Claiming a credit on Form 5695 does not automatically increase your refund. Both credits are nonrefundable and are generally limited by your federal income tax liability.
Source:
Form 5695 Instructions (2025)
Disclaimer: Always verify details with the current year’s IRS Form 5695 and its instructions, as well as with your state’s Department of Revenue. For complex situations, consult a tax professional or CPA.