What this line means
The combined total of all qualified residential clean energy property costs you paid during the tax year. Add together solar electric (line 1), solar water heating (line 2), small wind energy (line 3), geothermal heat pump (line 4), and qualified battery storage (line 4b). This total is multiplied by the credit rate on line 6a (30% for 2025) to calculate your preliminary credit amount. 1
Does this apply to you?
- You installed any combination of solar electric, solar water heating, wind, geothermal, or battery storage systems during the tax year
- You paid for at least one qualifying clean energy improvement on a U.S. home you own
- You entered costs on any of lines 1 through 4b on Form 5695
Easy to overlook
Combining multiple clean energy projects in one year You can install solar panels and a geothermal heat pump in the same year and claim credits for both on one return. Each project goes on its own line, and this line adds them all together. There is no cap on the total. A $30,000 solar system plus a $20,000 geothermal system gives you $50,000 here and a $15,000 credit. 1 IRS Form 5695 instructions — Line 5
Battery storage added without new solar panels A standalone battery system with at least 3 kilowatt-hours of capacity qualifies on its own — you do not need to install new solar panels at the same time. If you added battery storage to an existing solar setup, include that cost on line 4b and it flows into this total. 2 IRS Fact Sheet 2022-40 — Residential Clean Energy Credit
Watch out for this
Do not include costs for improvements to rental properties or homes outside the United States. The clean energy credit applies only to homes you own and use as a residence. If you install solar on a property you rent out full-time, those costs belong on the rental property’s depreciation schedule — not on Form 5695.
Double-check that you are not including any costs already reimbursed by a utility rebate or government grant. If your electric company gave you a $2,000 rebate on the solar installation, subtract that from your costs before entering the total here. 1
Footnotes
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IRS Form 5695 Instructions, Residential Energy Credits. https://www.irs.gov/pub/irs-pdf/i5695.pdf ↩ ↩2 ↩3
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IRS Fact Sheet 2022-40, Inflation Reduction Act Provisions Related to Residential Clean Energy. https://www.irs.gov/newsroom/energy-incentives-for-individuals-residential-property-credits ↩