Last reviewed: 2026-06-26 (UTC)
If you need Form 5695 instructions right now, start with the tax year first.
The current IRS instructions are for the 2025 Form 5695, which most homeowners would use when filing a 2025 federal return in 2026. If you are filing a different tax year, download the matching form and instructions before you do anything else because the line numbers, QMID rules, and credit limits can change.
Most homeowners then need to answer three questions fast:
- Are you in Part I or Part II?
- Which line group matches your project?
- Do you have the records the IRS expects, including any 2025 QMID requirements?
This page is built for that exact workflow.
This page is informational, not tax advice. Use the current IRS form and instructions as the filing authority, and use a qualified tax professional when your situation is not straightforward.
Quick answer
| Question | Practical answer |
|---|---|
| Which form year should most homeowners use today? | The 2025 Form 5695 if you are filing a 2025 return in 2026. |
| What goes in Part I? | Residential clean energy credit items such as solar electric, solar water heating, geothermal heat pumps, battery storage, and fuel cells. |
| What goes in Part II? | Energy efficient home improvement credit items such as insulation, windows, doors, panel enabling property, home energy audits, heat pumps, and heat pump water heaters. |
| Which lines matter most for many Watt Wallet readers? | Often line 25 (panel enabling property), line 26 (home energy audit), and line 29 (heat pumps / heat pump water heaters / biomass). |
| Does carryforward work the same way in both parts? | No. Part I has a carryforward line on the form. Part II does not mirror that same carryforward path on Form 5695 itself. |
| Do you need a QMID in 2025? | For specified Part II property placed in service in 2025, the IRS says yes. |
| Can a brand-new 2026 install qualify for the federal credits? | No. OBBBA terminated both the 25C and 25D credits for property placed in service (and expenditures made) after December 31, 2025. |
2025 updates to know before you start
Before you fill anything out, keep these points in view. The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, terminated both residential credits for anything placed in service after the end of 2025:
- The 2025 IRS instructions for Form 5695 confirm you cannot claim the residential clean energy credit (25D) for expenditures made after December 31, 2025.
- The same instructions confirm you cannot claim the energy efficient home improvement credit (25C) for expenditures or property placed in service after December 31, 2025.
- If you are claiming specified 2025 Part II property, the IRS says you must include the qualified manufacturer identification number (QMID) for each item.
- Beginning in 2024, home energy audits must be performed by a Qualified Home Energy Auditor or under that person's supervision.
- The IRS says Part I is available for existing homes and homes being constructed, while Part II is only available for existing homes.
If that already answers your question, the safest next move is to download the exact 2025 Form 5695 PDF and the matching 2025 instructions.
Jump to what you need
- Part I: solar, geothermal, battery storage, fuel cells, and carryforward
- Part II Section A: insulation, doors, windows, and skylights
- Part II Section B: central air, water heaters, furnaces, panel enabling property, home energy audits, heat pumps, and heat pump water heaters
- Lines 27 to 32b: annual caps, the line-31 tax-liability worksheet, the final Part II credit amount, and the checkbox cleanup
- Common mistakes: QMID, wrong tax year, panel misunderstandings, and rebate math mix-ups
Fill out Form 5695 in the right order
If you want the shortest practical filing workflow, use this order:
- Download the right tax-year form and instructions. If you are filing a 2025 return in 2026, use the 2025 Form 5695 PDF and 2025 instructions.
- Choose Part I or Part II first. Do not start entering numbers until you know which credit track applies.
- Gather your records before touching the lines. That includes invoices, proof of payment, placed-in-service dates, home addresses, manufacturer documentation, and any 2025 QMID values you need.
- Fill the line group for your project. Most homeowners do not need every section of the form.
- Run the tax-liability limit step. For Part II, the IRS says to complete the Energy Efficient Home Improvement Credit Limit Worksheet and enter that result on line 31 before you finish the final credit line.
- Finish the Part II wrap-up in the right order. On the 2025 form, line 32 is the smaller of line 30 or line 31, and that is the amount the form tells you to carry to Schedule 3 (Form 1040), line 5b. If line 32a or 32b applies, check the box and attach any required statement.
That order matters because the most common filing errors happen when homeowners start with the marketing headline instead of the exact section, date, and documentation rules.
Which part and line group applies to your project?
Use this table to get oriented fast.
| Project type | Form 5695 section | Line group most homeowners care about | What to watch |
|---|---|---|---|
| Solar electric | Part I | 1 | Clean-energy credit rules, not Part II home-upgrade rules. |
| Solar water heating | Part I | 2 | Same Part I credit track as solar electric. |
| Small wind | Part I | 3 | Part I category. |
| Geothermal heat pump | Part I | 4 | Geothermal belongs in Part I, not Part II. |
| Battery storage | Part I | 5a-5b | Current IRS guidance requires at least 3 kilowatt-hours of capacity. |
| Fuel cells | Part I | 7a-11 | Main-home and capacity/efficiency restrictions apply. |
| Insulation / air sealing | Part II, Section A | 18a-18b | Section A rules say not to include onsite prep or original installation costs here. |
| Exterior doors | Part II, Section A | 19a-19h | 2025 QMID rules apply; the category has its own sub-cap. |
| Windows / skylights | Part II, Section A | 20a-20d | 2025 QMID rules apply; the form caps line 20d at $600. |
| Panel enabling property | Part II, Section B | 25a-25e | Must enable separate qualifying property, meet NEC rules, and have at least 200 amps of load capacity. |
| Home energy audit | Part II, Section B | 26a-26c | The current form caps this category at $150. |
| Heat pump | Part II, Section B | 29a-29b | The heat-pump / HPWH / biomass bucket is capped separately at $2,000. |
| Heat pump water heater | Part II, Section B | 29c-29d | Same separate $2,000 bucket and 2025 QMID / efficiency requirements. |
| Biomass stove or boiler | Part II, Section B | 29e-29f | Same separate $2,000 bucket. |
If you are a typical Watt Wallet reader claiming a heat pump, heat pump water heater, panel enabling property, or audit, this table is usually the fastest way to find your section.
Three common Form 5695 examples
Sometimes the easiest way to understand the form is to see a realistic filing pattern.
Example 1: Heat pump installed in 2025
If you installed a qualifying heat pump in 2025 and are filing that 2025 return in 2026, the filing path usually runs through Part II, lines 29a-29b. You still need to confirm the current CEE efficiency tier, keep the invoice and proof of payment, and include any required QMID for specified 2025 property.
Example 2: Panel work that enabled a heat pump
If you upgraded panel-related equipment so a qualifying heat pump could be installed, the panel portion usually belongs in Part II, lines 25a-25e and the heat pump belongs in line 29. This is where the enabling-property rule matters most. If the panel work and the enabled equipment landed in consecutive tax years, read the current IRS instructions carefully before deciding which year controls the claim.
Example 3: Solar plus battery storage
If you installed solar electric property and qualifying battery storage, you are usually in Part I, not Part II. The solar portion generally maps to line 1, battery storage to lines 5a-5b, and the tax-liability / carryforward step later in Part I matters much more here than it does for typical Part II upgrade filers.
Before you fill out Form 5695
Gather these records first:
- the correct IRS form year and instructions
- itemized invoices
- proof of payment
- the address of each home where the property was installed
- the date the property was placed in service
- manufacturer documentation showing the equipment qualifies
- any required QMID values for specified 2025 Part II property
- the home energy audit report, if you are claiming one
- notes on any utility or third-party subsidies tied to the project
One IRS rule homeowners miss: if you received a subsidy from a public utility for the purchase or installation of an energy-conservation product and that subsidy was not included in your gross income, the IRS generally says you need to reduce your cost for the credit by that subsidy amount. The IRS also says that rule applies if a third party such as a contractor receives the subsidy on your behalf.
That is why rebate paperwork and tax-credit paperwork should live in separate folders. They interact, but they are not the same claim.
How to fill out Part I of Form 5695
Part I is for the residential clean energy credit.
This is where solar electric, solar water heating, small wind, geothermal heat pumps, battery storage, and fuel cells live.
What goes on the main Part I lines?
- 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: qualified battery storage technology costs
The current IRS instructions also say to include labor costs properly allocable to onsite preparation, assembly, original installation, and piping or wiring to interconnect the property to the home.
Two practical details many homeowners miss:
- battery storage must have a capacity of at least 3 kilowatt-hours
- fuel cell property has separate capacity and efficiency rules and must be installed on or in connection with your main home
Where Part I gets real for most filers
For many searchers, the filing pressure point is not lines 1 through 5 themselves. It is the tax-liability and carryforward step.
- Line 14 is where the form checks how much of the calculated Part I credit you can actually use.
- Line 16 is the current carryforward to 2026 line if line 15 is less than line 13.
In plain language: Part I is the section where the form itself explicitly handles carryforward.
How to fill out Part II, Section A
Part II is the energy efficient home improvement credit. Section A is the building-envelope section.
Start with the line-17 eligibility gates
The current IRS instructions say Section A is for qualified energy efficiency improvements installed in or on your main home in the United States, where:
- you are the original user
- the components are reasonably expected to remain in use for at least 5 years
- you can only claim the credit on one main home
- you cannot claim the credit for expenses related to the construction of a new home
If those gates fail, the rest of Section A usually does not matter.
Line 18: insulation and air sealing
Line 18 is for insulation material or systems, including air-sealing material or systems, that are specifically and primarily designed to reduce heat loss or gain and meet the code criteria the IRS references.
Important nuance: the IRS instructions say not to include onsite preparation, assembly, or original installation costs for building-envelope components in Section A.
Line 19: exterior doors
Line 19 asks for the cost of the most expensive qualifying exterior door, then the next two, then all others. For 2025 property, the instructions require QMID reporting on the relevant lines.
The category cap structure matters:
- up to $250 for one qualifying exterior door
- up to $500 total for all qualifying exterior doors
Line 20: windows and skylights
Line 20 is where you enter the qualifying windows or skylights. If you include additional qualifying windows on the follow-on line, the instructions say to attach a statement listing the QMID and cost of each item included there.
The form says do not enter more than $600 on line 20d.
If your real project question is window eligibility rather than the filing form itself, spend extra time with the current IRS home energy tax credits overview and the exact line-20 instructions before you file.
How to fill out Part II, Section B
Section B is where many electrification readers spend most of their time.
Start with lines 21a through 21c
These lines are the gatekeepers for residential energy property.
The current IRS instructions say:
- the qualified energy property must be installed on or in a home in the United States
- it must be property that was originally placed in service by you
- you must list the full address of each home where you installed it
The instructions also say to include labor costs properly allocable to onsite preparation, assembly, or original installation for the property categories reported on lines 22, 23, 24, 25, and 29.
Lines 22 through 24: central air, fossil water heaters, and furnaces/boilers
These sections still matter for general Form 5695 searchers, even if your main project is electrification.
- Line 22: central air conditioners
- Line 23: natural gas, propane, or oil water heaters
- Line 24: natural gas, propane, or oil furnaces or hot water boilers
For these sections, the IRS repeatedly points back to the highest efficiency tier established by CEE in effect at the beginning of the calendar year the property is placed in service, and the instructions require QMID reporting where applicable.
Line 25: panel enabling property
Line 25 is one of the most misread parts of the form.
It is for improvements to or replacement of panelboards, subpanelboards, branch circuits, or feeders when that work is installed to enable separate qualifying property.
This is not just a generic “my panel was expensive” line.
The IRS instructions say the enabling property must:
- enable the installation and use of a separate qualified improvement or certain qualified energy property
- be installed with the enabled property in 2025, or fit the consecutive-tax-year safe-harbor rule in the current instructions
- be installed consistent with the National Electrical Code
- have a load capacity of at least 200 amps
The enabled-property codes on line 25b are:
- A windows and skylights
- B central air conditioners
- C fossil water heaters
- D furnaces or hot water boilers
- E electric or natural gas heat pumps
- F electric or natural gas heat pump water heaters
- G biomass stoves or boilers
This is why not every standalone panel upgrade qualifies automatically. If the form question you are really trying to solve is panel eligibility, Watt Wallet's electric panel tax credit guide goes deeper on that narrower topic.
Line 26: home energy audit
The IRS says a qualifying home energy audit must include:
- an inspection of your main home in the United States
- a written report identifying the most significant and cost-effective improvements, including estimated energy and cost savings
- preparation by a Qualified Home Energy Auditor or under that person's supervision
The form caps this line at $150.
Line 29: heat pumps, heat pump water heaters, and biomass
For many Watt Wallet readers, line 29 is the biggest reason this page exists.
The instructions break it out like this:
- 29a-29b: electric or natural gas heat pumps
- 29c-29d: electric or natural gas heat pump water heaters
- 29e-29f: biomass stoves or boilers
For heat pumps and heat pump water heaters, the IRS points to the highest efficiency tier established by CEE that is in effect at the beginning of the calendar year the property is placed in service. For 2025 property, the instructions also require QMID reporting.
The form says do not enter more than $2,000 on line 29h.
If your actual project is a heat pump or heat pump water heater, these focused guides are more useful after you orient yourself on the form:
Where the credit limits actually get decided
This is where homeowners often realize the headline credit amount is not the same as the credit they can actually use.
| Line | What it does | Why it matters |
|---|---|---|
| 27 | Adds the capped Section A and Section B amounts that feed the general Part II bucket | This is the first “rolled-up” total for the standard Part II categories. |
| 28 | Limits that bucket to $1,200 | The annual cap is not a suggestion; the form enforces it here. |
| 29h | Caps the heat-pump / heat-pump-water-heater / biomass bucket at $2,000 | This is a separate bucket from the general $1,200 bucket. |
| 30 | Adds the bucket totals together | This is still not the final credit if your tax-liability limit is lower. |
| 31 | Takes the result from the Energy Efficient Home Improvement Credit Limit Worksheet | The instructions say to “complete the worksheet below to figure the amount to enter on line 31,” so this is the tax-liability gate for Part II. |
| 32 | Gives the final Part II credit amount as the smaller of line 30 or line 31 | The 2025 form says to also include this amount on Schedule 3 (Form 1040), line 5b. |
| 32a | Checkbox for joint occupants claiming the credit | If it applies, you check the box and attach a statement showing how the credit was allocated. |
| 32b | Checkbox for condominium / cooperative filers with a fractional share of qualifying costs | This is not another dollar-entry line; it is a reporting checkbox for that ownership situation. |
This is also where another common mistake shows up: homeowners know the annual caps, but forget that the form still checks tax liability before allowing the full amount.
And this is the cleanest distinction between the two parts:
- Part I has an explicit carryforward line on the form.
- Part II does not mirror that same line-by-line carryforward path on Form 5695 itself.
The line numbers most Watt Wallet readers care about
If you are here because of a specific project, use this cheat sheet:
- Heat pump -> line 29a for the most expensive system and 29b for additional qualifying systems
- Heat pump water heater -> lines 29c and 29d
- Panel enabling property -> lines 25a through 25e
- Home energy audit -> lines 26a through 26c
- Windows -> lines 20a through 20d
- Insulation / air sealing -> lines 18a and 18b
- Solar or geothermal -> Part I lines 1 or 4, not Part II
Common Form 5695 mistakes to avoid
1) Using the wrong tax-year form
If you are filing a different year, start over with the matching IRS version. “Filed in 2026” is not the same thing as “2026 form rules.”
2) Skipping QMID on specified 2025 Part II property
The current IRS instructions say QMID reporting is required for specified energy efficient home improvement property placed in service in 2025.
3) Claiming Part II on new construction
The IRS explicitly says the energy efficient home improvement credit is for existing homes, not new-home construction costs.
4) Treating every panel upgrade as automatically eligible
The panel section is narrower than many contractor sales narratives suggest. The enabling-property relationship and 200-amp rule matter.
5) Mixing rebate math and tax-credit math
A rebate is not the Form 5695 claim. Keep separate records and re-check how subsidies affect eligible cost.
6) Assuming carryforward works the same way in both parts
Part I includes a carryforward line. Part II does not give you that same line-by-line carryforward path on the form.
How Form 5695 fits with rebates and stacking
Form 5695 is the federal tax-credit filing step. It is not the place where you apply for a utility rebate, a state rebate, or an installer promotion.
That is why this filing workflow works best when you treat each savings track separately:
- rebate application path
- tax-credit filing path
- contractor quote assumptions
If you want help sorting those paths before you file, pair this page with:
- Electric Panel Tax Credit: Eligibility Guide
- Heat Pump Water Heater Tax Credit in 2026
- Heat Pump Tax Credit Guide
- Can You Stack Rebates and Tax Credits?
- Tax Credit vs Rebate: How Homeowners Should Compare Incentives and Contractor Quotes
FAQ
Which Form 5695 year should I use if I am filing in 2026?
If you are filing a 2025 federal return in 2026, use the 2025 Form 5695 and the matching 2025 IRS instructions. If you are filing a different tax year, download that exact version instead.
Where do I report a heat pump on Form 5695?
For the current 2025 form, electric or natural gas heat pumps are reported in Part II, lines 29a and 29b. The instructions say the property must meet the highest applicable CEE efficiency tier and include the required QMID reporting for specified 2025 property.
Where do I report a heat pump water heater on Form 5695?
For the current 2025 form, heat pump water heaters go in Part II, lines 29c and 29d.
Do I need a QMID for Form 5695?
For specified energy efficient home improvement property placed in service in 2025, the IRS instructions say yes. That requirement appears repeatedly across the Part II line instructions.
Can a panel upgrade qualify on Form 5695 by itself?
Not automatically. The instructions say panelboard, subpanelboard, branch-circuit, or feeder work must be installed to enable separate qualifying property and meet the form's capacity and code conditions.
Do rebates get reported on Form 5695?
No. Form 5695 is the IRS form for the residential clean energy credit and the energy efficient home improvement credit. Rebate applications are separate, and some subsidies can affect the costs you use for the credit calculation.