Form 5695 Instructions 2025: Line-by-Line Filing Guide

Last reviewed: September 18, 2026 (UTC)

This is general information, not individualized tax advice. The 2025 Form 5695 PDF and 2025 IRS instructions are the filing authorities.

Quick answer

The residence rules also differ. Part I can cover qualifying property for an existing home or a home being constructed. Part II is for improvements to an existing home. Within Part II, Section A uses main-home, ownership, original-use, and five-year rules; Section B uses a U.S. home that you use as a residence and the original-placed-in-service rule.

The 2025 law and the form year

The One Big Beautiful Bill Act changed the timing answer that appears in many older Form 5695 guides. The IRS says:

• The Energy Efficient Home Improvement Credit under Section 25C is unavailable for property placed in service after December 31, 2025.
• The Residential Clean Energy Credit under Section 25D is unavailable for expenditures made after December 31, 2025.

The IRS OBBB FAQ explains that a Section 25D expenditure is treated as made when original installation is complete. For construction or reconstruction, the timing rule uses the date the taxpayer's original use of the structure begins. A qualifying 2025 installation can therefore be claimed on the 2025 return filed in 2026. Paying in 2025 by itself does not make an installation completed after the deadline eligible.

The two parts also handle unused credits differently. Part I line 16 carries an unused 2025 residential clean energy credit to 2026 when the tax-liability limit reduces the amount on line 15. That carryforward belongs to a credit earned from an eligible 2025 project. It does not make a new 2026 installation eligible. Part II has no carryforward. The IRS energy-credit FAQs, including its timing FAQ, say unused Section 25C credit cannot be claimed in a later year.

Start with the filing workflow

Use this order for a 2025 claim:

1. Match the return year to the form year. A 2025 return filed in 2026 uses the 2025 form and instructions.
2. Choose Part I or Part II. Solar and battery storage belong in Part I. Heat pumps, insulation, windows, audits, and panel enabling work belong in Part II.
3. Match the project to its line group. The line map below separates costs that look similar but follow different rules.
4. Gather the records before entering costs. Include completion dates, itemized costs, proof of payment, the home's address, manufacturer information, and any QMID required for 2025 Part II property.
5. Apply the tax-liability worksheet. Part I uses the Residential Clean Energy Credit Limit Worksheet for line 14. Part II uses the Energy Efficient Home Improvement Credit Limit Worksheet for line 31.
6. Move the final amount to Schedule 3. Line 15 feeds line 5a. Line 32 feeds line 5b. The completed Form 5695 stays with the federal return.

Find the right 2025 line group

Part I: residential clean energy credit

Part I covers the residential clean energy credit for solar electric, solar water heating, small wind, geothermal heat pumps, battery storage, and fuel cells. The 2025 rate is generally 30% of qualifying costs. The form permits qualifying labor for onsite preparation, assembly, original installation, and piping or wiring that interconnects the property to the home.

Lines 1 through 5b: enter the property costs

• Line 1: qualified solar electric property costs.
• Line 2: qualified solar water-heating property costs.
• Line 3: qualified small wind energy property costs.
• Line 4: qualified geothermal heat pump property costs.
• Lines 5a-5b: line 5a asks whether battery storage has at least 3 kilowatt-hours of capacity. If the answer is yes, enter its costs on line 5b.

The address above line 1 is for the home associated with lines 1 through 4 and 5b. When more than one home is involved, the instructions use the home with the greatest total cost and call for a statement listing the other addresses.

Lines 6a through 16: calculate, limit, and carry forward

Lines 6a and 6b total the first property costs and apply 30%. Lines 7a through 11 handle fuel-cell eligibility, address, cost, capacity, and the fuel-cell limit. Line 12 brings in a credit carryforward from your 2024 Form 5695, line 16. Line 13 combines the current Part I credit, fuel-cell credit, and prior carryforward.

Line 14 comes from the Residential Clean Energy Credit Limit Worksheet. Line 15 is the smaller of lines 13 and 14, and the form directs you to place that amount on Schedule 3, line 5a. If line 15 is lower than line 13, line 16 carries the unused amount to 2026. File Form 5695 even when the tax-liability limit prevents you from using the full Part I credit in 2025.

Part II, Section A: insulation, doors, and windows

Section A is for qualified energy efficiency improvements installed in or on your U.S. main home. Lines 17a through 17e establish the gates: the home, original use, five-year expected use, address, and whether the costs relate to new-home construction. If the improvement is related to construction of a new home, those costs do not belong in Section A.

• Lines 18a-18b: enter qualifying insulation or air-sealing material on line 18a. Line 18b applies 30% and cannot exceed $1,200. The material must be specifically and primarily designed to reduce heat loss or gain and meet the 2025 IECC criteria in the instructions.
• Lines 19a-19h: line 19a starts with the most expensive qualifying exterior door and line 19b records its QMID. Lines 19c through 19g calculate the remaining doors. Line 19h cannot exceed $500, with a $250 limit for one door. QMID and cost details for additional doors go on the required statement.
• Lines 20a-20d: line 20a records the QMID and cost for up to four of the most expensive qualifying windows or skylights. Line 20b covers the others, with a statement listing each QMID and cost. Line 20d applies 30% and cannot exceed $600.

The form excludes onsite preparation, assembly, and original installation costs for lines 18a, 19a, 19d, 19e, 20a, and 20b. That is different from the labor treatment for the residential energy property lines in Section B.

Part II, Section B: equipment, panels, and audits

Lines 21a through 21c are the Section B gatekeepers. The property must be installed on or in connection with a U.S. home that you use as a residence, originally placed in service by you, and identified by its full address. For lines 22, 23, 24, 25, and 29, qualifying labor for onsite preparation, assembly, and original installation can be included.

Lines 22 through 24: equipment with individual $600 caps

• Lines 22a-22d: central air conditioners. The most expensive qualifying unit goes on line 22a with its QMID; other units go on line 22b and a supporting statement. Line 22d cannot exceed $600.
• Lines 23a-23d: natural gas, propane, or oil water heaters. The form takes the two most expensive qualifying units on line 23a, with the remaining units on line 23b and a statement. Line 23d cannot exceed $600.
• Lines 24a-24d: natural gas, propane, or oil furnaces or hot water boilers. The most expensive unit and QMID go on line 24a; other units and their QMID details go on line 24b and the supporting statement. Line 24d cannot exceed $600.

The equipment must meet the applicable efficiency requirements. For central air, fossil-fuel water heaters, and furnaces or boilers, the 2025 instructions refer to the highest CEE efficiency tier in effect at the beginning of the calendar year in which the property was placed in service.

Lines 25a through 25e: panel enabling property

Line 25 is narrower than a general panel-replacement credit. Line 25a asks whether you installed an improvement or replacement of a panelboard, subpanelboard, branch circuit, or feeder to enable separate qualifying property, and whether the enabling and enabled property were installed in 2025. Line 25b records the enabled-property code:

• A: windows or skylights on line 20a
• B: central air conditioners on line 22a
• C: natural gas, propane, or oil water heaters on line 23a
• D: natural gas, propane, or oil furnaces or hot water boilers on line 24a
• E: electric or natural gas heat pumps on line 29a
• F: electric or natural gas heat pump water heaters on line 29c
• G: biomass stoves or boilers on line 29e

Line 25c is the enabling-property cost, line 25d records its QMID, and line 25e applies 30% with a $600 cap. The instructions also require the work to be installed consistently with the National Electrical Code, have a load capacity of at least 200 amps, and be installed with qualifying property.

If the panel work and enabled property were installed in consecutive tax years, the 2025 instructions allow a safe harbor that treats both as installed in the later year. For example, a panel installed in 2024 and a qualifying heat pump water heater installed in 2025 may be treated as a 2025 installation under that rule. Keep both completion dates with the project records. Our electric panel tax-credit guide covers the panel-specific eligibility rules in more detail.

Lines 26a through 26c: home energy audits

Line 26a asks whether the audit included an inspection of your U.S. main home and a written report prepared by a Qualified Home Energy Auditor or under that person's supervision. The report must identify the most significant and cost-effective improvements, estimate energy and cost savings, and include the auditor's identifying information, certification attestation, and qualified certification program. Line 26b is the audit cost; line 26c applies 30% with a $150 cap.

Lines 29a through 29h: heat pumps, heat pump water heaters, and biomass

The 2025 form divides line 29 into three groups:

• Lines 29a-29b: electric or natural gas heat pumps
• Lines 29c-29d: electric or natural gas heat pump water heaters
• Lines 29e-29f: biomass stoves or biomass boilers

For heat pumps and heat pump water heaters, the applicable CEE highest efficiency tier is the one in effect at the beginning of the calendar year the property was placed in service. Biomass equipment must meet the 75% thermal-efficiency requirement in the instructions. The most expensive item in each group and its QMID go on lines 29a, 29c, or 29e; additional items go on the paired line and a statement. Line 29h applies 30% and cannot exceed $2,000.

QMID records are part of the 2025 filing

The 2025 form requires a valid four-character alphanumeric QMID for specified Part II property placed in service in 2025. That includes the applicable doors, windows and skylights, central air conditioners, fossil-fuel water heaters, furnaces or boilers, panel enabling property, heat pumps, heat pump water heaters, and biomass equipment. When a line covers “all other” items, the supporting statement must list each item's QMID and cost.

There are two important exceptions. The IRS PIN requirements FAQ says insulation and air-sealing materials do not require a PIN or QMID, and a home energy audit does not require one. For a 2025 claim, the form's QMID fields and instructions control the information entered with the return.

Keep the manufacturer certification or written qualification statement with the invoice. Do not confuse a QMID with a model number, serial number, or a contractor's internal project number.

Part II limits, line 31, and Schedule 3

Part II has two credit buckets:

Line 31 is a tax-liability limit, not another equipment cap. The worksheet starts with Form 1040, 1040-SR, or 1040-NR, line 18, subtracts the credits and adjustments listed in the instructions, and sends the result to line 31. If the worksheet result is zero or less, the form directs you to enter zero on lines 31 and 32.

Line 32a is the joint-occupant checkbox, which requires a statement explaining the allocation. Line 32b is for an occupant of a condominium or cooperative claiming a fractional share of qualifying costs. Neither checkbox is an additional dollar-entry line, and neither creates a Part II carryforward.

Rebates, subsidies, and Form 5695 are separate steps

Form 5695 calculates the federal credit. It is not a utility rebate application, a state incentive application, or an installer discount form.

The IRS says a public-utility subsidy for an energy-conservation product that is not included in gross income reduces the cost used for the credit, whether the utility pays you or pays a contractor on your behalf. A rebate based on the property's cost can also reduce the eligible cost when it comes from a party connected to the sale, such as a manufacturer, distributor, seller, or installer, and is not payment for services.

State energy-efficiency incentives are generally not subtracted unless they fit the federal definition of a rebate or purchase-price adjustment. Some may have separate federal income-tax treatment. Subsidized energy financing also cannot be used to calculate the Part II credit. Keep the rebate award, subsidy terms, financing terms, itemized invoice, and tax-credit calculation together so the same dollar is not counted twice. Our guide to rebates and tax credits explains the savings paths side by side.

Three common filing patterns

• 2025 heat pump: use Part II, lines 29a-29b, for a qualifying electric or natural gas heat pump, including the applicable efficiency record and QMID.
• Panel work that enabled a heat pump: use lines 25a-25e for the enabling work and line 29 for the heat pump. The panel line is not a general credit for every service-panel replacement.
• Solar plus battery storage: use Part I line 1 for solar electric property and lines 5a-5b for qualifying battery storage. Lines 14-16 determine the tax-liability limit and any Part I carryforward.

Common mistakes

• Using a 2026 form because the return is filed in 2026.
• Treating a purchase date as the placed-in-service or completed-installation date.
• Entering a heat pump, geothermal heat pump, or battery in the wrong part.
• Assuming every panel replacement qualifies without an enabled property, code-compliant work, and the 200-amp load-capacity rule.
• Omitting a required 2025 QMID or treating insulation and an audit as if they needed one.
• Putting the Part II final amount on Schedule 3 line 5a instead of line 5b.
• Assuming a local rebate automatically leaves the full invoice eligible for the federal credit.
• Carrying unused Part II credit into a later year. The IRS does not allow that carryforward.

FAQ

Which Form 5695 year should I use if I am filing in 2026?

Use the 2025 Form 5695 when you are filing a 2025 federal return. A qualifying 2025 installation can still be claimed in that return. A new property placed in service or expenditure made after December 31, 2025 does not qualify for the ended federal credits simply because the return is filed in 2026.

Where does a heat pump go on Form 5695?

For the 2025 form, electric or natural gas heat pumps go on Part II, lines 29a-29b. Heat pump water heaters go on lines 29c-29d. The applicable CEE efficiency tier, QMID, cost, and $2,000 line-29 bucket also apply.

Where does panel enabling property go?

Panelboards, subpanelboards, branch circuits, and feeders that meet the enabling-property rules go on Part II, lines 25a-25e. Line 25b identifies the property enabled, line 25c records the cost, line 25d records the QMID, and line 25e applies the 30% calculation up to $600.

Do rebates get entered on Form 5695?

Form 5695 has no separate rebate-entry line. A qualifying subsidy or rebate may reduce the cost used in the credit calculation, depending on its source and tax treatment. The rebate application itself remains separate from Form 5695.

Can unused Form 5695 credit carry forward?

Unused Part I residential clean energy credit can carry to 2026 through line 16 when the tax-liability limit prevents full use. Unused Part II energy efficient home improvement credit cannot carry forward.

After the federal filing path is separated from local program savings, use our incentives library to find the rebate options that match a future project.