IRS Form 8908 – In an era where sustainability meets financial incentives, the Energy Efficient Home Credit stands out as a valuable tax benefit for builders and contractors. Administered through IRS Form 8908, this credit rewards the construction of homes that meet stringent energy efficiency standards. Whether you’re a homebuilder looking to reduce your tax liability or simply curious about green building incentives, this guide covers everything you need to know about Form 8908 and the associated credit. Note that due to recent legislative changes, the credit applies to qualified homes acquired before July 1, 2026.
What Is the Energy Efficient Home Credit?
The Energy Efficient Home Credit, also known as the Section 45L credit, is a federal tax incentive designed to encourage the construction of energy-efficient residential properties. Eligible contractors can claim this credit for each qualified new energy-efficient home that is sold or leased to another person for use as a residence during the tax year. This non-refundable credit is part of the general business credit and can offset federal income taxes, potentially up to $5,000 per home.
Originally introduced to promote energy conservation, the credit has evolved through legislation like the Inflation Reduction Act of 2022 (IRA) and subsequent updates. It targets new constructions, substantial reconstructions, or rehabilitations that adhere to recognized energy standards, helping reduce energy consumption and greenhouse gas emissions in the housing sector.
Who Can Claim the Energy Efficient Home Credit?
The credit is available exclusively to “eligible contractors.” This includes:
- The person or business that constructed the home and owned it with a basis during construction.
- For manufactured homes, the producer who owned and had a basis in the home during production.
Partnerships and S corporations must file Form 8908 to claim the credit, while other taxpayers (such as those receiving pass-through credits) report it directly on Form 3800. Homeowners themselves do not qualify for this credit; instead, they may explore separate incentives like the Energy Efficient Home Improvement Credit (Form 5695) for personal upgrades.
To be eligible, contractors must ensure the home is located in the United States (including all 50 states and the District of Columbia, but excluding U.S. territories) and that construction was substantially completed after August 8, 2005.
What Qualifies as an Energy Efficient Home?
A qualified new energy efficient home must meet specific certification standards under programs administered by the Environmental Protection Agency (EPA) or the Department of Energy (DOE). Key requirements include:
- Certification: The home must be certified under an eligible version of the ENERGY STAR Residential New Construction Program, ENERGY STAR Manufactured New Homes Program, ENERGY STAR Multifamily New Construction Program, or the DOE Zero Energy Ready Home (ZERH) Program.
- Acquisition Date: The home must be acquired by another person for residential use on or before June 30, 2026.
- Energy Savings: Homes must comply with program-specific efficiency measures, such as improved insulation, efficient HVAC systems, and renewable energy integrations. For example, single-family homes under ENERGY STAR Version 3.2 (for acquisitions after 2024) emphasize airtight construction and high-performance windows.
Multifamily units have additional considerations, including prevailing wage requirements for higher credit amounts. Certification must be obtained from an approved certifier before the home is acquired and prior to claiming the credit.
Credit Amounts: How Much Can You Claim?
The credit amount varies based on the type of home, certification level, and compliance with additional rules like prevailing wages. For homes acquired from January 1, 2023, through June 30, 2026:
| Home Type | Certification | Prevailing Wage Met? | Credit per Home | |
|---|---|---|---|---|
| Single-Family | ENERGY STAR (not ZERH) | N/A | $2,500 | |
| Single-Family | ENERGY STAR + ZERH | N/A | $5,000 | |
| Multifamily | ENERGY STAR (not ZERH) | Yes | $2,500 | |
| Multifamily | ENERGY STAR + ZERH | Yes | $5,000 | |
| Multifamily | ENERGY STAR (not ZERH) | No | $500 | |
| Multifamily | ENERGY STAR + ZERH | No | $1,000 | These amounts are claimed per dwelling unit, making the credit particularly lucrative for large-scale developments. Note that the credit reduces the basis of the property for depreciation purposes, except in cases involving low-income housing or other specific credits. |
How to File IRS Form 8908?
Filing Form 8908 is straightforward but requires meticulous record-keeping. Here’s a step-by-step overview:
- Gather Documentation: Obtain certifications from ENERGY STAR or DOE programs. For multifamily claims with prevailing wages, attach Form 7220.
- Complete the Form: Use the December 2025 revision for tax years beginning in 2025 or later. Report the number of qualified homes in Part I, calculate credits in Parts II and III, and list addresses for the first 20 homes in Part III.
- Attach to Your Return: File with your federal tax return (e.g., Form 1120 for corporations). If you’re a pass-through entity, provide details to partners or shareholders.
- Claim on Form 3800: The credit flows to the General Business Credit form.
Download the latest Form 8908 PDF from the IRS website: https://www.irs.gov/pub/irs-pdf/f8908.pdf. Always consult a tax professional to ensure compliance, as errors can lead to audits or disallowed credits.
Certification and Documentation Requirements
Certification is non-negotiable. Contractors must:
- Engage a third-party certifier trained under the relevant ENERGY STAR or ZERH programs.
- Maintain records proving eligibility, including proof of certification dates and program versions.
- For ZERH claims, ensure the home meets standards in effect on January 1, 2023, or later applicable dates.
Good recordkeeping is essential, as the IRS may request documentation during reviews.
Recent Changes and Extensions to the Credit
The credit’s landscape has shifted recently:
- Termination Date Update: Originally set to expire December 31, 2032, the One Big Beautiful Bill Act (P.L. 119-21) advanced the deadline to June 30, 2026.
- Inflation Reduction Act Enhancements: Increased credit amounts and tied eligibility to ENERGY STAR and ZERH programs starting in 2023.
- Prevailing Wage Integration: Mandatory for maximum multifamily credits, requiring Form 7220 attachment.
These changes reflect a push toward higher efficiency standards while phasing out the incentive. For pre-2023 homes, lower credits ($1,000 or $2,000) applied based on older energy-saving thresholds.
Why Claim the Energy Efficient Home Credit Now?
With rising energy costs and environmental concerns, building energy-efficient homes not only qualifies you for tax savings but also appeals to eco-conscious buyers. The credit can significantly offset construction expenses, making sustainable building more accessible. However, with the June 30, 2026, cutoff approaching, eligible contractors should act promptly to maximize benefits.
For the most up-to-date details, visit the IRS website or consult a certified tax advisor. By leveraging Form 8908, you’re not just saving on taxes—you’re contributing to a greener future.