45L Energy-Efficient Home Tax Credit at Risk: What’s Next
- May 30, 2025
- 5 Minute Read
In This Article
Learn what’s happening with the 45L Energy-Efficient Home Tax Credit, why it matters for builders and developers, and how to take action to protect this incentive.
What’s Happening with 45L?
With the recent passing of the One Big Beautiful Bill (OBBB) in the U.S. House, the 45L Energy-Efficient Home Tax Credit is at risk of being phased out by the end of 2025 — well ahead of its original step-down plan through 2032.
The Senate is now reviewing OBBB and considering revisions. We expect a vote in the coming months. That means now is the time to act and make sure the 45L Tax credit stays in place.
Eliminating it would:
- Undercut builders and developers investing in energy-efficient design
- Reduces federal financial support for builders, developers, and affordable housing projects
- Raise energy costs for homeowners and renters
At Southern Energy Management, we’ve seen the value of 45L up close. In 2024 alone, we helped builders and multifamily developers save an estimated $6,447,500 — money reinvested into higher performing housing.
New to 45L? Learn how it works for single-family and multifamily projects →
What is 45L?
The 45L Tax Credit is a voluntary incentive that offers builders and developers up to $5,000 per qualifying home or unit for meeting energy efficiency standards like ENERGY STAR and Zero Energy Ready Home (ZERH).
For single-family home builders who choose to participate, the 45L Tax Credit is a key incentive that can offer an added supportive funding stream. For multifamily developers, the 45L Tax Credit is an added benefit for properties – like affordable housing projects – that are required to meet ENERGY STAR benchmarks.
Where did it come from? This tax credit was originally established in 2005, under Republican leadership and signed by President George W. Bush. Over the last 20 years, the home energy tax credit has demonstrated valuable impact leading to bi-partisan support of its extension.
Breakdown of the Current 45L Tax Credit
Single-Family Homes
- $2,500 for homes certified under the ENERGY STAR® Single-Family New Homes program.
- $5,000 for homes certified under the DOE’s Zero Energy Ready Home (ZERH) program.
Multifamily Homes
- $500 per unit for homes certified under the ENERGY STAR® Multifamily New Construction program – $2,500 per unit if the project also meets prevailing wage requirements.
- $1,000 per unit for homes certified under the ZERH program – $5,000 per unit if the project also meets prevailing wage requirements.
Why Does the 45L Energy Efficient Home Tax Credit Matter?
Supporting builders, developers, and trades – In 2024, 22% of homes built took advantage of the 45L Tax Credit, showing strong voluntary participation in the industry. While entirely optional, the tax credit offers an impactful incentive to those choosing to invest in energy-efficient building practices.
Conserving housing sector planning & stability – Businesses need a stable policy environment in order to invest, innovate, and flourish. The rapid elimination of these credits provides the opposite effect and will unfairly and negatively impact businesses across the housing industry that have made long term plans based on Federal Policy like 45L.
Building a resilient housing stock – The 45L Credit drives the construction of healthier, more resilient, and energy-efficient homes and buildings. Removing it will dampen that innovation and decrease the long term value that it creates for our communities.
Keeping homeowner protections in place – The 45L incentive also helps builders create energy-efficient homes that save homeowners significant money each month on utility bills. At a time when housing and energy costs continue to rise in North Carolina and across the U.S., removing this initiative that reduces homeownership costs would be counterproductive.
What’s Next?
The OBBB is working through the Senate and is expected to receive many revisions in that process. If the 45L incentive is something that you want to continue to take advantage of, we recommend voicing that opinion to your Senator.
Email Your Local Representatives
Sending a simple and respectful email to your local representatives in support of the 45L Tax Credit is one way to advocate for its future.
North Carolina Senators
Senator Ted Budd, via: Charlie Hobbs, Legislative Assistant
charlie_hobbs@budd.senate.gov
Senator Thom Tillis:
https://www.tillis.senate.gov/email-me
We are actively advocating for incentives that support our partners and will provide guidance and resources as more information becomes available. If you have questions, reach out to our single-family or multifamily teams today.
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North Carolina’s solar power and building performance expert. Founded in 2001, we’ve worked for 20+ years to improve the way people make and use energy.
