Form 5695 Instructions: How to Claim Home Energy Credits
Last reviewed: 2026-05-13 (UTC)
If you need Form 5695 instructions, start with the tax year first.
On the IRS pages reviewed for this guide, the current 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 IRS form and instructions before you do anything else. The line numbers, QMID rules, and credit limits can change.
There is one more date issue to keep in mind. The current 2025 IRS instructions say you can't claim the residential clean energy credit for expenditures made after December 31, 2025, and you can't claim the energy efficient home improvement credit for expenditures or property placed in service after December 31, 2025. In plain language: this guide is for filing eligible work under the current 2025 rules, not for assuming the old credits automatically still apply to brand-new 2026 installs.
The second thing to know is that Form 5695 covers two different homeowner credit tracks:
- Part I = the residential clean energy credit
- Part II = the energy efficient home improvement credit
That split matters because most Watt Wallet readers searching for heat pumps, heat pump water heaters, panel upgrades, windows, insulation, and home energy audits will spend most of their time in Part II, while readers claiming solar, battery storage, geothermal heat pumps, or fuel cells will usually need Part I.
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
Use this shortcut before you start:
- Solar panels, solar water heating, geothermal, battery storage, fuel cells -> start in Part I
- Insulation, doors, windows, central air, certain water heaters and furnaces, panel upgrades, home energy audits, heat pumps, heat pump water heaters -> start in Part II
- Most heat pump and home-upgrade homeowners -> the lines that matter most are often 25, 26, and 29 in Part II
- Carryforward works differently -> Part I has a carryforward line on the form; Part II does not have a comparable carryforward line on Form 5695 itself
If you are not sure which credit you are actually claiming, stop there. The easiest way to make a filing mistake is to mix a rebate, a federal credit, and a contractor quote assumption into one blended number.
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 (qualified manufacturer identification number) 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 important IRS rule that 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, you generally need to reduce your cost for the credit by that subsidy amount. The IRS says that rule also 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.
What projects go on which lines?
| Project type | Form 5695 section | Line(s) most homeowners care about |
|---|---|---|
| Solar electric | Part I | 1 |
| Solar water heating | Part I | 2 |
| Small wind | Part I | 3 |
| Geothermal heat pump | Part I | 4 |
| Battery storage | Part I | 5a-5b |
| Fuel cell | Part I | 7a-11 |
| Insulation / air sealing | Part II, Section A | 18a-18b |
| Exterior doors | Part II, Section A | 19a-19h |
| Windows / skylights | Part II, Section A | 20a-20d |
| Central air conditioner | Part II, Section B | 22a-22d |
| Gas / propane / oil water heater | Part II, Section B | 23a-23d |
| Gas / propane / oil furnace or boiler | Part II, Section B | 24a-24d |
| Panelboard / subpanel / feeder work that enables eligible property | Part II, Section B | 25a-25e |
| Home energy audit | Part II, Section B | 26a-26c |
| Electric or natural gas heat pump | Part II, Section B | 29a-29b |
| Electric or natural gas heat pump water heater | Part II, Section B | 29c-29d |
| Biomass stove or boiler | Part II, Section B | 29e-29f |
How to fill out Part I of Form 5695
Part I is for the residential clean energy credit.
Before line 1, the form asks for the address of the home tied to lines 1 through 4 and 5b. If you made improvements to more than one home that you used as a residence during 2025, the IRS instructions say to put the address with the greatest total cost on the form and attach a statement with the additional addresses.
What goes on lines 1 through 5b?
These lines cover the major Part I categories:
- 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 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 useful details many readers miss:
- battery storage must have a capacity of at least 3 kilowatt hours
- fuel cell property has its own capacity and efficiency rules, and it must be installed on or in connection with your main home
Fuel cells are different
Fuel cells run through lines 7a through 11 and have extra restrictions. The instructions say qualified fuel cell property must be installed on or in connection with your main home in the United States, have at least 0.5 kilowatt of nameplate capacity, and exceed the stated efficiency threshold.
Line 14 is where tax liability matters
Line 14 uses the Residential Clean Energy Credit Limit Worksheet. This is the point where the form checks how much of the calculated credit you can actually use given your federal tax situation and other credits on the return.
Line 16 is the Part I carryforward line
This is one of the biggest reasons homeowners search for Form 5695 instructions instead of just reading a short credit explainer. The IRS instructions say that if you cannot use all of the Part I credit because of the tax-liability limit, you may be able to carry the unused portion forward to 2026.
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 lines 17a through 17e before you enter any costs
These are the eligibility gate questions.
The 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 tell you 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. The instructions also require QMID reporting on the relevant lines for 2025 property.
The cap structure matters here:
- 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 four most expensive qualifying windows or skylights and then the cost of all the rest. If you list additional qualifying windows on line 20b, 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.
How to fill out Part II, Section B
Section B is where many electrification readers spend most of their time.
Lines 21a through 21c come first for a reason
These lines are the gatekeepers for residential energy property.
The 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 cover central air, fossil water heaters, and furnaces/boilers
These sections matter even if your main project is electrification, because some homeowners still search the form while comparing or replacing mixed systems.
- 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 instructions repeatedly point back to the highest efficiency tier established by the CEE in effect at the beginning of the calendar year the property is placed in service, and they require QMID reporting where applicable.
Line 25 is the panel-upgrade section most homeowners misread
Line 25 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 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 fall into the safe-harbor timing rule for consecutive tax years
- be installed consistent with the National Electric 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 one of the highest-value sections for Watt Wallet because it helps homeowners understand that not every standalone panel upgrade qualifies automatically.
Line 26 is for home energy audits
The IRS instructions say 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 is where many electrification projects land
For many Watt Wallet readers, line 29 is the biggest reason this page exists.
The IRS 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 instructions point to the highest efficiency tier established by the 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.
Lines 27 to 32 are where Part II totals and limits get real
The mechanics matter:
- Line 27 adds the capped amounts from the Section A and Section B categories that feed the general bucket
- Line 28 limits that bucket to $1,200
- Line 29h is the separate heat-pump / heat-pump-water-heater / biomass bucket capped at $2,000
- Line 30 adds those buckets together
- Line 31 runs the Energy Efficient Home Improvement Credit Limit Worksheet based on tax liability
- Line 32 is the final Part II credit that flows to Schedule 3 (Form 1040), line 5b
This is also where another common mistake shows up: homeowners often know the headline annual caps, but forget that the form still checks tax liability before allowing the full amount.
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 -> line 29c and 29d
- Panel upgrade that enables a heat pump or heat pump water heater -> line 25a through 25e
- Home energy audit -> line 26a through 26c
- Windows -> line 20a through 20d
- Insulation / air sealing -> line 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
The current instructions today are for tax year 2025. If you are filing a different year, start over with the matching IRS version.
2) Skipping QMID on 2025 specified property
The IRS instructions say QMID reporting is required for specified energy efficient home improvement property placed in service in 2025. Do not assume your invoice alone is enough.
3) Claiming Part II on new construction
The instructions explicitly say 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 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 Guide
- Heat Pump Tax Credit Income Limit Explained
- Can You Stack Rebates and Tax Credits?
- Tax Credit vs Rebate: How Homeowners Should Compare Incentives and Contractor Quotes
FAQ
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 shows up 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.
What if I share ownership or occupancy with someone else?
Joint occupants generally complete separate Form 5695 filings. The IRS instructions say each occupant enters the amounts they paid, and if the combined credit would exceed the limit for an item, the credit has to be allocated. In those cases, the form can require a box check and an attached allocation statement.
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.