The Inflation Reduction Act (IRA) of 2022 extended and expanded federal tax credits that reward homeowners for energy-efficient improvements. In 2025, these credits remain fully active and can be worth thousands of dollars for LA homeowners upgrading electrical panels, HVAC systems, and other systems — with no income limit for most credits.

Section 25C: Energy Efficient Home Improvement Credit

The core credit is Section 25C, which allows homeowners to claim 30% of qualifying improvement costs, up to a $1,200 annual cap. Critically, this cap resets every tax year — a homeowner who maxes out in 2025 can claim again in 2026 for different improvements. Qualifying categories include electrical panel upgrades (when needed to enable other qualifying improvements), exterior windows and skylights, heat pumps and heat pump water heaters, insulation and air sealing, and energy audits. Source: IRS.gov – Publication 5886-A, Energy Efficient Home Improvement Credit; IRS Notice 2023-59.

Electrical Panel Upgrades: Up to $600 Back

For electrical panel upgrades specifically, the credit is 30% up to $600 per year. The upgrade must be UL-listed and rated for at least 200 amps. IRS Notice 2023-59 clarifies that a panel upgrade qualifies when it enables installation of other qualifying equipment — such as an EV charger or heat pump. In practice, a 200A panel upgrade in the LA area costs $2,000–$4,000. The $600 federal credit, combined with LADWP's rebate of up to $500 for qualified upgrades, meaningfully reduces out-of-pocket cost. Source: IRS.gov, LADWP (ladwp.com/rebates).

Heat Pump HVAC: Separate $2,000 Credit

Heat pump systems qualify for the 25C credit at 30%, up to $2,000 per year — and this subcategory has its own cap separate from the $1,200 limit. This means a homeowner can claim $1,200 for an electrical panel plus $2,000 for a heat pump in the same tax year, for a total of $3,200 in credits. TECH Clean CA, a statewide program, additionally offers rebates of $1,000–$4,000 for heat pump replacements depending on income tier. Source: TECH Clean CA (techclean.ca.gov), DSIRE (dsireusa.org).

EV Charger Credit: Section 30C

The Alternative Fuel Vehicle Refueling Property Credit (Section 30C) covers 30% of EV charger installation costs up to $1,000 for residential property. In 2025, this credit applies to property in qualified census tracts — and most LA residential areas qualify. Combined with the Section 30C credit, LADWP and SCE offer separate incentives for Level 2 EV charger installation, sometimes covering the full hardware cost. Source: IRS.gov (Form 8911), LADWP EV Programs, SCE (sce.com/ev).

California State Programs

TECH Clean CA: Heat pump incentives through your utility (LADWP, SoCalGas, SCE), with rebates of $500–$4,000 depending on system type and household income tier. LADWP Efficiency Rebates: Up to $500 for qualifying electrical panel upgrades, plus separate rebates for LED lighting and smart thermostats. HERO / PACE Financing: Property Assessed Clean Energy programs allow financing for improvements repaid through property taxes — no upfront cost, qualifying at the time of property tax billing. Sources: TECH Clean CA (techclean.ca.gov), NRDC (nrdc.org/ira-tracker), LADWP.

What You Need to Claim

To claim 25C credits, you need: the manufacturer's certification statement for each qualifying product, IRS Form 5695 (Residential Energy Credits) filed with your federal return, and receipts showing purchase price and installation date. No pre-approval is required — credits are claimed at tax filing. Consult a tax professional if you're combining multiple credits or your project costs are high. DG can provide the itemized invoices and product documentation needed for your filing.