Section 25D Battery Storage Credit Is Gone for New Installs — But 2025 Filers Still Have Until October

The Section 25D residential clean energy credit for standalone battery storage is over — but not in the way most people realize. The Inflation Reduction Act (August 2022) expanded Section 25D to cover battery storage systems of at least 3 kWh installed without solar, effective January 1, 2023. That removed a longstanding solar-pairing requirement and opened three years of eligibility for DIY and professionally installed battery systems alike. Then the One Big Beautiful Bill Act (OBBBA), signed July 4, 2025 as Public Law 119-21, terminated Section 25D for all residential systems placed in service after December 31, 2025. If you're installing a home battery today, there is no federal 30% credit waiting for you.

What that means for 2025 installers is that the credit is still claimable — but the clock is running. The standard April 15 filing deadline has passed for most filers. Anyone who filed a federal extension has until October 15, 2026 to file and claim the credit. Homeowners who filed their 2025 return on time without claiming the credit for a qualifying standalone battery install can file an amended return (Form 1040-X) to recover it. For 2023 and 2024 installs that weren't claimed, amendments to prior-year returns are still available within the standard three-year window.

The credit math is straightforward: 30% of qualifying costs for systems installed between January 1, 2023 and December 31, 2025. A 20 kWh system installed professionally at $8,000–$10,000 in equipment and labor generated a $2,400–$3,000 credit — both materials and installation labor qualify under Section 25D for professional installs. For DIY builders who self-installed, only materials costs apply (no paid labor means no labor to claim): a community-sourced 20 kWh LFP pack built for $2,200 in materials yields a $660 credit. The 3 kWh minimum capacity threshold applies to all systems.

State-level incentives remain on the table in several states and are not affected by the federal change. California's SGIP rebate program covers standalone storage and remains on the books, though most utility service areas have exhausted their ratepayer-funded budgets and are operating on waitlists as of early 2026. New York, Massachusetts, and Colorado maintain their own clean energy storage credits independent of Section 25D. Homeowners in these states should verify current program availability before counting on a state rebate — budget exhaustion is real and common.

To claim a 2025 install: use IRS Form 5695, Part I (Residential Clean Energy Credit), which already reflects standalone battery storage eligibility. Retain documentation of the installation date, system capacity, and itemized component costs. One more wrinkle worth knowing: if your 2025 credit exceeds your federal tax liability for the year, the unused portion carries forward to your 2026 return and subsequent years — the carryforward right persists even though the credit itself has ended. For post-2025 installations, Section 25D is no longer available to residential homeowners. Battery systems financed through a third-party lease or power purchase agreement may still qualify for the Section 48E commercial clean electricity investment tax credit through 2032 — consult a tax professional for structuring.