Can the energy efficiency tax credit be carried over to future years?  

Only the tax credit for the following 5 products CAN be carried forward to future years:

· Geothermal Heat Pumps

· Solar Panels

· Solar Water Heater

· Small Wind Energy Systems

· Fuel Cells

The IRS has not issued guidance on how long the tax credit can be carried forward. It is clear that it can be carried forward through 2016, and it appears that it may be able to be carried forward beyond 2016. We will update this FAQ when the IRS clarifies this point. The energy efficiency tax credit is technically "non-refundable" which means at the end of the year, you can't get back more in credits than you paid to the government in taxes throughout the year. If you are unable to claim the entire 30% of your purchase for the above products in one year, you can carry forward the unclaimed portion to future years. 

The tax credit for all other products CAN NOT be carried over to future years.

Section 25D (c) (2) CARRYFORWARD OF UNUSED CREDIT-

(A) Rule for years in which all personal credits allowed against regular and alternative minimum tax. In the case of a taxable year to which section 26 (a)(2) applies, if the credit allowable under subsection (a) exceeds the limitation imposed by section 26 (a)(2) for such taxable year reduced by the sum of the credits allowable under this subpart (other than this section), such excess shall be carried to the succeeding taxable year and added to the credit allowable under subsection (a) for such succeeding taxable year.

(B) Rule for other years. In the case of a taxable year to which section 26 (a)(2) does not apply, if the credit allowable under subsection (a) exceeds the limitation imposed by paragraph (1) for such taxable year, such excess shall be carried to the succeeding taxable year and added to the credit allowable under subsection (a) for such succeeding taxable year.

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Topic Information
  • Topic #: 23002-14819
  • Date Created: 4/21/2009
  • Last Modified Since: 11/7/2011
  • Viewed: 15675
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