If you’ve been thinking about installing solar panels or making other home energy upgrades like investing in a heat pump, now is a critical time to act. Make the call right now to take advantage of thousands of dollars in tax credits that are ending years earlier than anticipated. 

Several federal tax incentives, originally scheduled to remain in place through 2032 under the Inflation Reduction Act, are being phased out earlier than expected due to recent legislative changes adopted in Public Law No. 119-21 (H.R. 1-119th Congress 2025-2026 – One Big Beautiful Bill Act). These incentives have helped millions of Americans transition to cleaner technologies by offsetting upfront costs. Although the financial landscape is shifting, the environmental and economic advantages of adopting clean energy remain substantial.  

The implementation of energy-efficient upgrades such as heat pumps and installing clean energy systems like residential solar panels plays a significant role in advancing the City’s Climate Action Plan by reducing greenhouse gas (GHG) emissions associated with buildings.  According to the City’s  2020 GHG emissions inventory, more than one-third of emissions come from natural gas and electricity use in buildings in Encinitas. Implementing energy-efficient upgrades such as heat pumps and installing clean energy systems like residential solar panels can substantially reduce these emissions.  

Beyond environmental benefits, these clean energy technologies offer long-term financial savings by lowering utility bills and reducing dependence on volatile gas prices. For instance, a 2024 study by the National Renewable Energy Laboratory (NREL), conducted for the U.S. Department of Energy (DOE), found that an average U.S. household can reduce energy consumption between 31% to 47% by switching to heat pumps, depending on system efficiency. 
The loss of tax credits changes the finances, but it does not change the fact that choosing to go electric and embracing clean energy options in homes and vehicles are the very impactful actions you can take as a consumer. The long-term environmental and economic benefits of adopting clean energy remain significant. 

The short on the new deadlines for tax credits*:  

• Energy Efficiency Home Improvements: Switch to a heat pump or make other qualifying energy efficient home improvements by December 31, 2025 to get up to $2,000 in tax credits. 

• Residential Clean Energy Systems:  Tax credits covering 30% of clean energy systems like solar panels end on December 31, 2025. Systems must be paid for but not necessarily installed by the deadline.  

The bottom line is that it’s critical that more people choose solar power and home efficiency upgrades like heat pumps. The time to make these choices is now—for the climate and for your wallet.