If your contractor upgraded your electrical panel to support a new heat pump or other qualifying equipment, that work qualifies for its own $600 tax credit — separate from the equipment credit.
Credit Expired December 31, 2025
The 25C Energy Efficient Home Improvement Credit expired on December 31, 2025 due to the "One Big Beautiful Bill" (Public Law 119-21). If you had electrical work done by that date to support qualifying equipment, you can still claim the credit on your 2025 tax return. (IRS FAQ on Public Law 119-21)
Most people miss this credit because they focus on the equipment itself. But the IRS allows you to claim the electrical infrastructure required to support that equipment, a separate line item on Form 5695.
Quick Summary
- Line 25 covers electrical panels, circuits, and feeders
- Credit: 30% of costs, capped at $600
- Must be installed to enable qualified energy equipment
- Both electrical work AND equipment must be installed same tax year
- This is IN ADDITION to your equipment credit (e.g., heat pump)
What Qualifies as Enabling Property
The IRS calls this "enabling property." It's electrical infrastructure that makes it possible to install qualified energy equipment like heat pumps or heat pump water heaters.
Qualifying Electrical Work
- Panel upgrades or replacements
- Subpanel installations
- New branch circuits
- Feeder upgrades
- Required electrical components (breakers, wiring)
The key word is "required." If your existing panel couldn't handle the load from your new heat pump and needed an upgrade, that qualifies. If you upgraded your panel for unrelated reasons, it doesn't.
Does NOT Qualify
- Electrical work unrelated to energy equipment
- Panel upgrades done in a different tax year than equipment
- Work for non-qualifying equipment
- Standard maintenance or repairs
The Same Tax Year Requirement
This trips people up. The electrical work and the equipment it enables must both be installed in the same tax year.
Install a panel in December 2024 for a heat pump installed in January 2025? No credit for the panel. Both must happen in the same calendar year.
The IRS is strict here. They want proof that the electrical work directly enabled the equipment installation, and timing is part of that proof.
Credit Amount
You get 30% of the electrical work costs, with a maximum credit of $600.
Tax Credit Calculator
This calculator provides an estimate. Your actual credit may vary based on your tax situation. The credit is non-refundable and cannot exceed your tax liability.
Example calculations:
- Panel upgrade cost: $1,000 → Credit: $300
- Panel upgrade cost: $2,500 → Credit: $750, capped at $600
- Circuit additions: $800 → Credit: $240
Labor costs are included. If your contractor charged $1,500 for the panel upgrade (materials and labor combined), calculate 30% of the full $1,500.
How It Stacks With Equipment Credits
Here's the important part: Line 25 is in addition to your equipment credit on Line 29.
Example: Heat Pump + Electrical Work
| Equipment | Credit Limit | Notes |
|---|---|---|
| Heat pump (Line 29) | $2,000 | 30% of $8,000 cost |
| Electrical panel (Line 25) | $600 | 30% of $2,000 cost |
| Total credits | $2,600 | Separate caps, both claimable |
Line 25 and Line 29 are separate credit lines with separate caps. You can claim both in the same year.
This is why it's critical to itemize electrical costs separately on your contractor invoice. If the electrical work is bundled into one lump sum, ask for a breakdown.
Form 5695 Line 25: Step by Step
Line 25a: Answer the Qualifying Question
Answer "Yes" if you installed or replaced:
- Panelboards
- Subpanelboards
- Branch circuits
- Feeders
...specifically to enable installation of qualified energy equipment, and both the electrical work and the equipment were installed in the same tax year.
Line 25b: Enter Enabled Property Code
Enter the letter code for what equipment the electrical work enabled:
- A = Insulation or air sealing
- B = Exterior door
- C = Window or skylight
- D = Central air conditioner
- E = Electric heat pump
- F = Gas, propane, or oil water heater
- G = Gas, propane, or oil furnace or boiler
- H = Heat pump water heater
- I = Biomass stove or boiler
For heat pump installations, enter "E". For heat pump water heaters, enter "H".
Line 25c: Enter Electrical Costs
Enter the total cost of the electrical improvements from your contractor invoice. Include materials and labor.
Line 25d: Enter QMID of Enabled Equipment
This line asks for "QMID of enabling property" but electrical panels don't have QMIDs.
Enter the QMID of the equipment being enabled (your heat pump or water heater). The form wording is confusing, but this is what the IRS wants.
Line 25e: Calculate Credit
Multiply Line 25c by 30% (0.30). Maximum credit is $600.
Enter the result on Line 25e.
The QMID Confusion on Line 25d
Common Point of Confusion
Line 25d says "QMID of enabling property" but that's misleading. Electrical panels don't have Qualified Manufacturer Identification Numbers.
Enter the QMID of the enabled equipment (the heat pump, water heater, etc. that required the electrical work). This links the electrical credit to the equipment credit.
If your panel work enabled a heat pump with QMID "N8H2", enter "N8H2" on Line 25d. If it enabled multiple equipment types (e.g., heat pump + HPWH), Line 25d has two slots for entering both QMIDs.
Find your equipment QMID in our searchable directory.
Documentation You Need
Keep these records for at least 3 years after filing:
Required Documentation
- Contractor invoice showing electrical work itemized separately
- Installation date(s) for electrical work and equipment
- Equipment invoice showing installation date
- AHRI certificate for the enabled equipment
- Payment records for both electrical work and equipment
The invoice is critical. It should clearly separate electrical costs from equipment costs. If your contractor gave you one lump sum, request an itemized breakdown before filing.
Common Scenarios
Scenario 1: Heat Pump + Panel Upgrade
You installed a heat pump ($8,000) and upgraded your electrical panel ($1,800) in November 2025.
- Line 29a: QMID + $8,000
- Line 29h: $2,000 (30% of $8,000, capped)
- Line 25b: Code "E" (heat pump)
- Line 25c: $1,800
- Line 25d: Same QMID as Line 29a
- Line 25e: $540 (30% of $1,800)
Total credits: $2,540
Scenario 2: HPWH + Circuit Addition
You installed a heat pump water heater ($2,500) and added a dedicated 240V circuit ($600) in June 2025.
- Line 29c: QMID + $2,500
- Line 29h: $750 (30% of $2,500)
- Line 25b: Code "H" (heat pump water heater)
- Line 25c: $600
- Line 25d: Same QMID as Line 29c
- Line 25e: $180 (30% of $600)
Total credits: $930
Scenario 3: Heat Pump + HPWH + Panel
You installed both a heat pump ($7,000) and heat pump water heater ($3,000), requiring a panel upgrade ($2,200), all in March 2025.
- Line 29a: HP QMID + $7,000
- Line 29c: HPWH QMID + $3,000
- Line 29g: $10,000
- Line 29h: $2,000 (30% of $10,000, capped at $2,000 combined for Line 29)
- Line 25b: Codes "E" and "H"
- Line 25c: $2,200
- Line 25d: Both QMIDs from Lines 29a and 29c
- Line 25e: $600 (30% of $2,200, capped)
Total credits: $2,600 (max possible for heat pump equipment + electrical)
If You Miss This Credit
Many people file their taxes, claim the heat pump credit on Line 29, and completely miss Line 25 for electrical work. If you realize later that you qualified, you can amend your return.
File Form 1040-X (Amended U.S. Individual Income Tax Return) to claim the missed credit. You have three years from the original filing deadline to amend.
Other Equipment That Can Enable Line 25
While this article focuses on heat pumps, other qualifying equipment can also enable the electrical credit:
- Central air conditioners (Code D)
- Gas/propane/oil water heaters (Code F)
- Gas/propane/oil furnaces or boilers (Code G)
- Biomass stoves or boilers (Code I)
- Windows, doors, insulation (Codes A, B, C)
The electrical work must be required for the installation. If you replaced a gas furnace with another gas furnace using existing electrical, no credit. If you installed new equipment requiring electrical upgrades, you qualify.
Limits and Caps
25C Credit Limits (2025 Tax Year)
| Equipment | Credit Limit | Notes |
|---|---|---|
| Heat pumps + HPWH (Line 29) | $2,000 | 30% of costs, shared cap |
| Electrical panel (Line 25) | $600 | 30% of costs |
| AC, furnaces, water heaters | $600 each | Lines 22-24 |
| Windows, doors, insulation | $1,200 | Lines 18-20 combined |
| All Part II credits combined | $3,200 | Total maximum per year |
Line 25 counts toward the $3,200 annual cap but has its own $600 sub-limit.
Tax Software Handling
Most tax software will ask about electrical panel upgrades when you enter energy equipment. Look for questions like:
- "Did you make electrical improvements to support this equipment?"
- "Were electrical upgrades required for installation?"
- "Line 25 enabling property"
If your software doesn't automatically prompt for this, manually navigate to Form 5695, Part II, Line 25 and enter the information directly.
Official Resources
Official IRS instructions for Form 5695, see page 8 for Line 25 guidance
IRS.govIRS overview of the Energy Efficient Home Improvement Credit
IRS.govOfficial FAQ about the credit expiration and eligibility
IRS.govNext Steps
If you installed electrical work to support qualifying equipment by December 31, 2025:
- Get an itemized invoice showing electrical costs separately
- Find your equipment QMID in our directory
- Complete Form 5695 Line 25 when filing your 2025 taxes
- Claim both the equipment credit (Line 29) and electrical credit (Line 25)
For a complete walkthrough of Form 5695, including all sections and lines, see our Form 5695 Guide.
Don't leave $600 on the table. If you paid for electrical work to enable your heat pump, claim it.