In recent years, U.S. federal energy policy has shifted markedly. What began with generous, multi-decade incentives for homeowners and builders is now being compressed by new legislation. On July 4, 2025, President Donald J. Trump signed the One Big Beautiful Bill Act (OBBBA), a sweeping tax and spending law that includes major modifications to clean energy tax credits and incentives. Holland & Knight+2US SIF+2
For homeowners planning a new custom home, a second-story addition, or a new garage in New Jersey (or elsewhere) through 2026, this shift creates a “use-it-or-lose-it” moment. The question becomes: how to align construction and remodel plans to benefit from federal incentives before key expiration dates — or pivot to state and utility rebates once federal credits expire.
1. What Changed: Key Federal Incentives Under OBBBA
1.1 Expiration of major homeowner credits
The 2025 law signed by President Trump alters or ends many of the clean-energy and efficiency tax credits that had been expanded under earlier legislation. Key provisions: IRS+2White & Case LLP+2
- Energy Efficient Home Improvement Credit (Section 25C) — 30% credit on qualifying energy upgrades (insulation, high-efficiency windows/doors, HVAC, etc.), with a limit of $3,200 per year. Credit valid for property placed in service through December 31, 2025. IRS+1
- Residential Clean Energy Credit (Section 25D) — 30% credit on home solar, geothermal, and other eligible clean energy systems. The credit ends for expenditures after December 31, 2025. IRS+2EnergySage+2
As a result, 2025 stands out as a critical year for homeowners to complete energy-related upgrades or solar installations if they want to benefit from those credits.
2. What Continues to 2026: Builder Credits and EV Infrastructure
Not all incentives vanished with OBBBA. Some tax credits still apply through mid-2026, offering opportunity for new home builds or infrastructure-enabled garages.
- New Energy Efficient Home Credit (Section 45L) — available for builders constructing ENERGY STAR or DOE-certified high-efficiency homes. The credit remains valid for homes acquired by buyers by June 30, 2026. IRS+1
- Alternative Fuel Refueling Property Credit (Section 30C) — for residential EV charging equipment, remains valid for property placed in service by June 30, 2026. IRS+1
For projects already in planning (e.g., custom homes, garages, ADUs), these credits provide a window through mid-2026 for energy-forward design and EV-ready infrastructure.
3. Why the 2025–2026 Window Matters
Key implications
- Last opportunity for many homeowners to lock in 30% solar or energy-efficient upgrade savings. The 2025 cutoffs effectively end those federal credits for most future installs.
- Builder-side credits shift decision-making upstream. Builders and buyers of new homes face a mid-2026 deadline for energy-efficient new home credits, influencing design and specification decisions now.
- EV readiness and future-proofing become more important. With EV chargers covered through 2026, it makes sense for homeowners building a new garage or ADU to wire for 240V now — even if they defer the charger itself.
- Long-term value framing becomes critical. As federal credits phase out, energy efficiency, comfort, lower utility bills, and resale value become the main justification for building science upgrades.
In effect, 2025 and 2026 are a pivot point, where many “green” benefits move from tax-credit-driven to value-driven.
4. What Was Older: A Legacy of Bipartisan Solar Incentives
It is worth noting that federal solar and energy-efficient home incentives predate recent laws by decades. The original tax credits for residential renewable energy trace back to the Energy Tax Act of 1978 — created during the Carter administration in response to the energy crisis. Master Resource+2Wikipedia+2
Since then, multiple administrations — Republican and Democrat — have extended or modified solar tax credits repeatedly. Data shows the credit has been amended nine times over the past two decades. SolarReviews+2McDermott+2
During the Trump administration, there was one extension: in late 2020 a two-year extension of the solar investment credit maintained 26 percent for projects starting in 2021 and 2022, delaying a drop to 22 percent. Forme Solar+1
This legacy context is important: while 2025–2026 signals a major shift, solar and energy-efficient home incentives have existed for decades, and homebuilders and homeowners have long responded to them.
5. What This Means for New Homes, Additions, and Garages (2025–2026)
New custom homes
- Homes started now that plan to close with buyers by mid-2026 can still qualify for the 45L energy-efficient home credit, making high-performance builds more financially attractive.
- Including conduit, EV-ready wiring, and energy-efficient HVAC, envelope, and solar-ready design becomes a competitive advantage before the incentive window closes.
Additions and second-story expansions
- Additions and second-story add-on projects scheduled for late 2025 can combine efficiency improvements with existing construction scope to leverage 25C/25D credits (if upgrades meet qualifying standards).
- Even after those credits expire, designing to high standards during renovation may pay off through energy savings and long-term comfort/resale value.
Garages, ADUs, and accessory buildings
- Detached or attached garages built with 240V wiring and EV-ready infrastructure can still leverage the 30C credit through mid-2026.
- Designing garages with solar-ready roofs, proper structural allowances, and panel upgrades positions the property for future electrification even if solar installation is deferred.
6. Why Builders and Contractors Need to Act Now
With the law signed by President Trump already in effect, timing matters more than ever. Projects initiated too late may miss valuable incentives. For builders and general contractors like us, that means:
- Prioritize qualifying efficiency and solar upgrades in plans for any home, addition, or accessory structure built for 2025–2026 occupancy.
- Frame scopes to align with tax credit and rebate deadlines, but also educate clients about long-term value beyond credits.
- Prepare for a transition: as federal incentives fade, value-based decisions (comfort, energy savings, resale value) become the baseline.
Working with an experienced builder ensures your design and construction strategy maximize eligibility and long-term benefit.
7. Next Steps for Homeowners
- Evaluate where your project stands relative to 2025–2026 deadlines.
- If possible, commit to energy-efficient upgrades, EV infrastructure, or solar-ready design now.
- Consult a tax professional about eligibility under current rules.
- Work with a builder or contractor who understands energy-policy deadlines and can optimize scope accordingly.