The 45L tax credit pays an eligible contractor $500 to $5,000 for each qualified new energy efficient home it builds and then sells or leases to someone as a residence. The One Big Beautiful Bill Act ended the credit for homes acquired after June 30, 2026, so only homes sold or leased on or before that date can still produce a claim.
That means the 45L tax credit is now a filing and cleanup exercise for most builders. Homes acquired in the first half of 2026 belong on the 2026 return, and qualifying homes from earlier years that were never claimed may still be picked up on amended returns while the refund window is open. The rest of this guide covers the amounts, the ENERGY STAR and Zero Energy Ready Home (ZERH) standards, prevailing wage, Form 8908 and a worked example.
Section 45L of the Internal Revenue Code, the New Energy Efficient Home Credit, is a business credit for the party that builds a home. The homeowner gets nothing from it. Under the statute, the credit equals the applicable amount for each qualified home that is "constructed by the eligible contractor" and "acquired by a person from such eligible contractor for use as a residence during the taxable year" (26 U.S.C. 45L).
A qualified home is a dwelling unit in the United States whose construction was substantially completed after August 8, 2005, that was acquired by another person on or before June 30, 2026, and that is certified to the required energy standard. Construction includes substantial reconstruction and rehabilitation, so a gut renovation can qualify in the same way a new build does (Instructions for Form 8908).
Homeowners looking for a credit on their own purchase are dealing with a different set of rules. Solar and battery systems on an existing home fall under the residential clean energy credit, which has its own rules and end date.
The Inflation Reduction Act had extended 45L through the end of 2032. Public Law 119-21, the One Big Beautiful Bill Act signed in July 2025, replaced that date. The IRS states it directly: the law "changed the termination date for the section 45L new energy efficient home credit from December 31, 2032, to June 30, 2026. You can't claim the credit for qualified new energy efficient homes acquired after June 30, 2026" (Instructions for Form 8908). The statute now reads that the section "shall not apply to any qualified new energy efficient home acquired after June 30, 2026" (26 U.S.C. 45L(h)).
The test date is acquisition. A permit or construction start before the cutoff does not move a home inside the window. A home closed on July 2, 2026 earns nothing, even if it was finished and certified in May.
"Acquired" covers more than a sale. The IRS instructions say a home "leased by a person from an eligible contractor for use as a residence during the tax year is considered acquired." A home the contractor keeps and lives in is not acquired. This matters most for rental communities, where each unit's lease start date decides whether that unit made the cutoff.
OBBBA ended or shortened several other energy incentives at the same time. Builders with commercial or solar projects can compare the 45L timeline with the energy investment tax credit under sections 48 and 48E and the broader summary of green energy tax credits for small businesses.
The IRS summarizes the post-2022 credit as "up to $5,000 based on the applicable program and program requirements under which the home was built" (IRS: Credit for builders of energy-efficient homes). The Form 8908 line instructions set out the specific amounts.
| Home type | Standard met | Prevailing wage met | Credit per home or unit | Form 8908 line |
|---|---|---|---|---|
| Single-family or manufactured | ENERGY STAR, not ZERH | Not required | $2,500 | Line 1 |
| Single-family or manufactured | ENERGY STAR and certified ZERH | Not required | $5,000 | Line 2 |
| Multifamily unit | ENERGY STAR Multifamily, not ZERH | Yes | $2,500 | Line 3 |
| Multifamily unit | ENERGY STAR Multifamily and certified ZERH | Yes | $5,000 | Line 4 |
| Multifamily unit | ENERGY STAR Multifamily, not ZERH | No | $500 | Line 5 |
| Multifamily unit | ENERGY STAR Multifamily and certified ZERH | No | $1,000 | Line 6 |
Multifamily credits are figured per dwelling unit, which is why apartment projects generate the largest totals. Homes acquired before 2023 follow the older version of the credit and are reported on the prior revision of Form 8908 for that year.
To qualify at all, a home must be eligible to participate in one of three ENERGY STAR programs: Residential New Construction, Manufactured New Homes, or Multifamily New Construction. The program version a home must meet depends on when it was acquired, which catches builders who designed to an older version.
The statute and the Form 8908 instructions set the version for each home type (26 U.S.C. 45L(c); Instructions for Form 8908):
| Home type | National requirements | Regional requirements in effect on |
|---|---|---|
| Single-family, acquired before 2025 | ENERGY STAR Single-Family New Homes 3.1 | Later of January 1, 2023 or January 1 two calendar years before acquisition |
| Single-family, acquired after 2024 | ENERGY STAR Single-Family New Homes 3.2 | Later of January 1, 2023 or January 1 two calendar years before acquisition |
| Manufactured home | Most recent ENERGY STAR Manufactured Home National program requirements | Not applicable |
| Multifamily unit | Most recent ENERGY STAR Multifamily New Construction National Program Requirements | Later of January 1, 2023 or January 1 three calendar years before acquisition |
The $5,000 and $1,000 tiers require certification as a zero energy ready home under the Department of Energy's ZERH program. The IRS defines a zero energy ready home as "a dwelling unit certified as a zero energy ready home under the ZERH program of the Department of Energy as in effect on January 1, 2023 (or any successor program determined by the Secretary of the Treasury)."
Certification has a timing rule. An eligible contractor "must obtain any certification(s) the dwelling unit needs to meet the applicable program requirement(s) referred to in section 45L(c) before the dwelling unit is acquired from the eligible contractor by a person for use as a residence and before claiming the energy efficient home credit." A certifier is someone eligible to issue certifications under the ENERGY STAR or ZERH program, typically a home energy rater working with a recognized rating organization. A certificate dated after the closing or lease start is a problem for that unit.
The five-fold jump from $500 to $2,500 (or $1,000 to $5,000) depends on prevailing wage. Under the Form 8908 instructions, the eligible contractor "must ensure that any laborers and mechanics employed by the eligible contractor or any subcontractor in the construction of such residence are paid wages at rates not less than the prevailing rates for construction, alteration, or repair" (Instructions for Form 8908).
Three practical points follow from the instructions:
Wage records come from payroll and subcontractor files, so the books need to hold them by project. Builders who track this through a job cost system have an easier time, and construction project cost tracking software can tie certified payroll to each building.
The eligible contractor is "the person or business that constructed the qualified new energy efficient home and owned and had a basis in the home during its construction." For manufactured homes, it is the producer that owned and had a basis in the home during production (Instructions for Form 8908).
Ownership is the test. A general contractor hired on a fee or cost-plus basis usually never owns the home, so the developer or builder-owner holds the credit. The instructions address this case: when a third-party contractor builds for an owner, the owner is the eligible contractor and the third-party contractor is not.
Partnerships and S corporations "must file this form to claim the credit," and the credit then passes to partners and shareholders on Schedule K-1 under code AM. Partners should track how the credit and the related basis reduction affect their accounts, which is covered in capital accounts and basis in partnership tax. S corporation shareholders face similar questions on Form 7203 stock and debt basis.
The cutoff limits which homes qualify. It does not limit when you file for them. Four groups of builders still have a live claim as of October 2026:
Rental communities that opened in phases deserve a unit-by-unit review. Units leased by June 30, 2026 qualify; units leased later do not, even within the same building.
A calendar-year builder that is the owner and eligible contractor on all of these projects had the following activity in 2026:
| Group | Qualifying units | Credit per unit | Credit |
|---|---|---|---|
| Single-family, ENERGY STAR | 40 | $2,500 | $100,000 |
| Single-family, ZERH | 10 | $5,000 | $50,000 |
| Multifamily with prevailing wage, leased by June 30 | 84 | $2,500 | $210,000 |
| Multifamily leased after June 30 | 0 of 36 | $0 | $0 |
| Total 45L credit | $360,000 |
Two comparisons show what drove the result. Without prevailing wage, the 84 units would have earned $500 each, or $42,000, and the total would have been $192,000. Prevailing wage added $168,000. The 36 late-leased units would have added $90,000 at $2,500 each had they been leased by the cutoff.
The builder must also reduce the construction cost basis of each home by its credit. The instructions say "you must reduce the expenses incurred in the construction of each new home by the amount of the credit when figuring your basis in the property," with an exception for figuring adjusted basis under the low-income housing credit. On the multifamily building, that is $210,000 off the cost basis of the 84 qualifying units. The builder lists the addresses of the first 20 homes in the new Part III of Form 8908, attaches Form 7220 for the line 3b units, and carries the total to Form 3800 for the general business credit.
Use the December 2025 revision of Form 8908 for tax years beginning in 2025 or later, and prior revisions for earlier years. A practical sequence:
Good construction books make these steps far easier. A builder that keeps closing dates, certificates and payroll by project, as described in outsourced accounting for construction companies, can assemble the claim from records already on hand.
Did the 45L tax credit expire? Yes, for new acquisitions. The One Big Beautiful Bill Act moved the termination date from December 31, 2032 to June 30, 2026, and no home acquired after that date qualifies.
Can I still claim the 45L credit in 2026? Yes, for qualifying homes sold or leased on or before June 30, 2026. Those homes go on the return for the tax year of acquisition, and missed homes from earlier years can be claimed on amended returns while the refund period for each year remains open.
How much is the 45L credit per home? Single-family and manufactured homes earn $2,500 at the ENERGY STAR level or $5,000 if also certified ZERH. Multifamily units earn $500 or $1,000, rising to $2,500 or $5,000 when the prevailing wage requirements are met.
Does 45L have an apprenticeship requirement? The IRS instructions for 45L describe only a prevailing wage requirement for the increased multifamily amounts. Form 7220 is still attached for those lines, even though its title mentions apprenticeship.
Who claims the credit when a general contractor builds for a developer? The developer, if it owned and had a basis in the home during construction. A hired contractor that never owned the home is not the eligible contractor.
Madras Accountancy supports home builders and the CPA firms that serve them with construction bookkeeping and business tax return preparation, including credit forms such as Form 8908 and Form 3800. To review homes acquired before the cutoff or earlier years that may still be open, contact our team.
The section 4960 excise tax is 21% of nonprofit pay over $1M. From 2026 it covers all employees. See the medical carve-outs, Form 4720 and a worked example.
The paid family and medical leave tax credit is permanent from 2026. See the 12.5% to 25% rates, the premium option, the 6-month rule and how Form 8994 works.
Opportunity zones become permanent in 2027 under the One Big Beautiful Bill. See the new deferral, rural bonus, and the 2026 handoff.
