The Inflation Reduction Act of 2022 created the largest set of clean-energy and energy-efficiency tax credits in American history, with direct upside for residential and commercial contractors, homeowners, and small businesses. Three years on, the legislative landscape has shifted significantly: the One Big Beautiful Bill signed into law July 4, 2025 phased out most of the IRA's contractor-relevant credits before they were originally set to end in 2032.
This guide covers the legislative timeline, the four credits with hard end dates contractors and homeowners need to know about, the separate HVAC refrigerant compliance rule that reshaped new-equipment installs, and the practical action items for both contractors and customers ahead of the deadlines.
The IRA and the OBBB Timeline
Congress passed the Inflation Reduction Act on August 12, 2022, and President Biden signed it into law on August 16, 2022. The bill took effect January 1, 2023 and was designed to run through 2032 on most of its credit provisions. The Department of Energy billed it as the single largest climate-and-energy investment in American history at the time of passage.
The 2025 One Big Beautiful Bill, signed by President Trump on July 4, 2025, moved up the end dates on the IRA's residential and commercial contractor credits. Most of the credits that were originally scheduled to run through 2032 now end either December 31, 2025 or June 30, 2026 depending on the specific section. The IRS home energy tax credits page reflects the new deadlines.
The Four Credits and Deadlines
Four IRA credits drove most of the contractor and homeowner upside. All four have now reached their hard end dates.
25C: Home Improvement Credit
The Energy Efficient Home Improvement Credit under Section 25C covered residential energy upgrades including heat pumps, heat pump water heaters, insulation, exterior doors and windows, and electrical panel upgrades, at up to 30 percent of project cost with annual caps. The credit was no longer available for property placed in service after December 31, 2025. Any qualifying upgrade completed and energized by year-end 2025 remained eligible on the homeowner's 2025 tax return.
25D: Clean Energy Credit
The Residential Clean Energy Credit under Section 25D covered solar electric, solar water heating, fuel cells, geothermal heat pumps, and battery storage at a flat 30 percent of installed cost with no annual cap. The credit was repealed for expenditures made after December 31, 2025. Solar installs in particular saw a year-end rush as homeowners and installers raced to get systems up and running before the deadline. With the federal credit gone, homeowners now look to state and utility incentive programs to offset the cost of clean-energy upgrades.
45L: New Home Construction Credit
The New Energy Efficient Home Credit under Section 45L paid $2,500 per ENERGY STAR home and $5,000 per zero-energy-ready home to the contractor who built it. The credit is eliminated for units acquired after June 30, 2026. Builders with units in pipeline construction have a narrowing window to close out under the old rules.
179D: Commercial Buildings
The Section 179D Energy Efficient Commercial Buildings Deduction allowed commercial-building owners and design-build contractors to deduct up to $5.00 per square foot on qualifying energy-efficient new construction or retrofit projects. The deduction is terminated for property placed in service after June 30, 2026. Commercial projects mid-construction should target a placed-in-service date inside that window.
HVAC Refrigerant Compliance
Separate from the tax-credit phase-outs, a federal refrigerant rule banned the manufacture and import of new residential and light-commercial air conditioning and heat pump systems using refrigerants above 700 GWP (global warming potential) as of January 1, 2025, pushing the industry toward R-32 and R-454B and away from the long-standing R-410A. Existing R-410A equipment manufactured before that date may still be installed under EPA's 2026 update, which removed the originally planned installation cutoff, though some states enforce a stricter deadline. HVAC contractors quoting new system installs should verify the equipment ships with a compliant refrigerant, confirm their technicians are certified to handle the new refrigerants under EPA Section 608, and update their parts inventory accordingly.
What to Do Before the Deadlines
The window to claim the remaining credits is short, and the contractor's role is mostly logistical. For 25C and 25D work, homeowners needed in-progress residential energy upgrades and solar installs finished and turned on before December 31, 2025, the install completion date written down carefully, and the manufacturer's product certifications and installer invoice in hand to claim the credit on their 2025 return. For 45L new construction, builders should hustle to close on units in finishing stages and confirm the ENERGY STAR or zero-energy-ready certification paperwork before the June 30, 2026 cutoff. For 179D commercial work, design-build contractors should target install completion dates inside the same window and coordinate with the owner's accountant on the qualifying square-footage calculation.
Homeowners who completed qualifying 25C or 25D work in 2025 claim the credit on Form 5695 with the 2025 tax return. Any upgrade started in 2025 but finished in 2026 falls outside the window. For new clean-energy projects going forward, the relevant savings now come from state and utility incentive programs rather than the expired federal credits.
Tracking the Documentation
A contracting business running multiple IRA-eligible jobs through the deadline needed the office side to track three things per job: the date the install was finished and turned on, the manufacturer certifications attached to the equipment installed, and the paperwork handed to the customer for their tax return. Smart Service handles this through the customer-history record, attaching install dates, photos, certification documents, and the invoice to each job so the documentation is one click away when the customer or their accountant asks.
Smart Service comes in two products matched to the business's QuickBooks setup. Smart Service Desktop pairs with QuickBooks Desktop for businesses running Pro, Premier, or Enterprise. Smart Service Cloud works with QuickBooks Online, QuickBooks Desktop, or standalone, with a modern cloud-app feature set. The QuickBooks edition decision guide covers which one fits a given business. For the broader trade-side framing of the heat pump water heater and electrification opportunity that the IRA helped seed, the future of plumbing guide covers the equipment and material shifts that outlast the credit deadlines.
What Comes After the Deadlines
The IRA's energy-efficiency credits drove a meaningful run of residential and commercial upgrade work over the past three years, and the shortened OBBB timeline is the new operating constraint. Contractors that hustled the remaining pipeline through the install completion dates captured the last of the credit value, while the underlying customer demand for heat pumps, solar, insulation, and panel upgrades continues regardless of federal tax-credit policy.
Smart Service for Contractors
If you are running a contracting business and want a software stack that handles scheduling, dispatch, customer history, mobile invoicing, and recurring service contracts, Smart Service integrates with QuickBooks Desktop and QuickBooks Online and the iFleet mobile app keeps techs in the field synced with the office. Try a free demo to see how it fits!
