If you are mulling installing solar panels on your roof or making other energy- efficient improvements to your home, you may want to act quickly to take advantage of one of two federal income tax credits. First, is the residential clean energy credit for homeowners who, through 2034, install a power system that uses solar or other renewable energy. Second, is the energy-efficient home improvement credit for homeowners who make smaller energy-saving purchases for their homes through 2032.

How long these two credits — which reduce the taxes you owe dollar for dollar — will remain on the books, and what, if any, changes will be made, are open questions. As of this writing, Republican lawmakers in Washington were in the midst of negotiations to extend the tax changes in the 2017 Tax Cuts and Jobs Act that automatically expire at the end of 2025. They include lower individual income tax rates and wider tax brackets, higher standard deductions and bigger lifetime estate-and-gift-tax exemption.

The odds are very good that Congress will pass a tax package sometime this year, despite a series of hurdles that lawmakers will have to overcome. The probable timing for enactment is this summer, but it could drag into the fall.

The tax bill will also likely scale back some of the green energy tax credits that were created, expanded or renewed in the 2022 Inflation Reduction Act. What those changes will be or how they may affect the two home-energy-savings tax credits are uncertain. However, we are pretty sure that most changes in any tax package would take place on a prospective basis, starting in 2026. Since homeowners may claim a home energy credit only for the year the improvements are made, if you’re thinking of making any energy-saving upgrades, you’ll want to pay for them and get them completed before Dec. 31 to ensure a tax credit. They should be claimed on IRS Form 5695.

Residential clean energy credit: This tax break is for homeowners who install an alternative energy system that relies on a renewable energy source, such as solar, wind, geothermal, or fuel cell or battery storage technology. Think solar panels, solar-powered water heaters, geothermal heat pumps, wind turbines, fuel cells. The credit equals 30% of the cost of materials and installation of systems that you install in your home through 2032. It falls to 26% in 2033, 24% in 2024 and then expires.

There is no maximum-credit dollar limit for solar, geothermal, wind or battery storage systems. But for fuel cells, the credit is capped at $500 for each half-kilowatt of power capacity. Unused credits can be carried forward to reduce tax owed in future years. Homeowners who install a renewable energy system sometimes qualify for a rebate. These rebates are nontaxable, but they reduce the system’s cost for figuring the credit.

Energy-efficient home improvement credit: The basic credit is 30% of the cost and installation of certain types of insulation, boilers, central air-conditioning systems, water heaters, heat pumps, exterior doors and windows, etc., that you put into a home through 2032. These items must also meet certain energy-efficiency requirements, depending on the product. There is a $1,200 general aggregate yearly credit limit. But many specific upgrades have lower monetary credit limits and others have higher ones.

Here are the item-by-item yearly caps:

$150 for a home-energy audit

$500 in aggregate for exterior doors (a maximum of $250 a door)

$600 for exterior windows or skylights

$600 for natural gas, propane or oil water heaters; central air conditioners; or natural gas, propane or oil furnaces or boilers

$2,000 for biomass stoves or biomass boilers, electric or natural gas heat pump water heaters, or electric or natural gas heat pumps

Unlike the residential clean energy credit, you cannot carry forward any unused energy-efficient home improvement credits.

As an example, let’s say that in 2025, you purchase and install in your house two exterior doors at a cost of $1,000 each, windows and skylights at a total cost of $2,200, and a $6,000 central air conditioner. Your 2025 tax credit amount is $1,200. Now, change the facts. In 2025, you purchase and install in your home a natural gas heat pump that costs $7,000, a $4,000 natural gas tankless water heater and a $6,000 central air conditioner. Your total maximum credit is $3,200 — $2,000 for the heat pump, $600 for the water heater and $600 for the air conditioner.