What is the 25C tax credit and how do I claim it?

The 25C Energy Efficient Home Improvement Credit lets homeowners claim 30% of qualifying energy-upgrade costs back as a federal tax credit, capped at $1,200/year for most categories ($2,000/year for heat pumps and heat-pump water heaters specifically). Eligible items include heat pumps, central AC, insulation, air sealing, energy-efficient windows and doors, and home energy audits. Equipment must meet ENERGY STAR or AHRI certification — keep the model number from your installer's invoice. Claim on IRS Form 5695 with your annual federal return. The credit stacks on top of utility-level rebates and HEEHRA without reducing them. Available through 2032.