Energy Credit Carryforward 2026: Which Credits Roll Over and How Long
The federal 25D Residential Clean Energy Credit (solar/battery/geothermal) allows unlimited carryforward to future tax years — if you owe less tax than your credit, the excess rolls to next year automatically. The federal 25C Energy Efficient Home Improvement Credit does NOT allow carryforward — unused credit is forfeited. The federal 30D Clean Vehicle Credit, when transferred to dealer at point of sale, requires no carryforward (it is paid out as cash off the price). When 30D is claimed at filing instead, it is non-refundable and limited to tax owed in the install year — no carryforward.
25D Unlimited Carryforward
Form 5695 Part I line 16 calculates carryforward to next year. No time limit — credit can roll forward indefinitely until used. If you have low tax liability in install year, 25D still pays out eventually.
25C No Carryforward
Form 5695 Part II calculates 25C credit against tax owed in the install year. Excess credit is forfeited — no rollforward. This is why timing 25C-eligible projects matters more than 25D-eligible projects.
30D POS Transfer vs Filing
POS transfer: dealer applies $7,500 immediately to sale price. No tax credit on your return — the dealer captures it (and they get the cash from IRS). Claim-at-filing: you owe enough tax in install year to use the full $7,500 against. No carryforward in either case.
Why 25D Carryforward Matters
For homeowners with low tax liability ($20,000 25D credit but only $15,000 federal tax owed), the unused $5,000 rolls to next year. This makes 25D effectively refundable over time for homeowners with consistent income.