Looking for a 2026 Tax Break?
Where to Put Your Money Now That Energy and EV Credits Have Expired
As we move toward the end of 2026, taxpayers may be thinking about purchases, investments, or contributions they can make before year-end to reduce their federal income tax bill.
For the past several years, clean energy improvements and electric vehicles were frequently part of that conversation. But many of the federal tax credits that made those purchases particularly attractive have now expired.
That does not mean year-end tax planning is over. It means taxpayers may want to look elsewhere for opportunities that better fit the current tax law.
Many Popular Energy and EV Credits Are Gone
The Energy Efficient Home Improvement Credit, which helped taxpayers with qualifying improvements such as heat pumps, insulation, windows, doors, and certain heating and cooling equipment, ended for property placed in service after December 31, 2025.
The Residential Clean Energy Credit, which included qualifying solar, geothermal, battery storage, and certain other clean energy property, also ended after 2025.
Federal credits for new and previously owned clean vehicles generally ended for vehicles acquired after September 30, 2025. The Alternative Fuel Vehicle Refueling Property Credit, which could apply to qualifying EV charging equipment, ended for property placed in service after June 30, 2026.
There are transition rules, particularly for vehicles acquired before the September 30, 2025 deadline, and qualifying 2025 energy expenditures may still affect a taxpayer's return.
But for someone deciding where to put additional money during the remainder of 2026, these credits generally are no longer the opportunities they once were.
So Where Should You Look for Tax Savings Instead?
A tax deduction or credit should rarely be the only reason to spend money.
Spending $10,000 unnecessarily to save $2,000 in taxes still leaves you $8,000 poorer.
A better year-end tax planning question is: What was I already planning to save, spend, invest, or give, and can I structure that decision to receive the best available tax benefit?
Increase Retirement Contributions
For many taxpayers, putting additional money toward retirement may provide a better long-term benefit than purchasing something simply because it qualifies for a tax incentive.
For 2026, the IRA contribution limit is $7,500, with an additional $1,100 catch-up contribution for taxpayers age 50 or older.
Employer-sponsored retirement plans may provide substantially higher contribution opportunities. Depending on the type of account and the taxpayer's circumstances, contributions can potentially reduce current taxable income while building retirement savings.
Traditional IRA deductions are subject to income limitations and participation in employer retirement plans, so making a contribution does not automatically mean it will be deductible.
Self-employed taxpayers and small-business owners may have additional options through SEP IRAs, SIMPLE IRAs, solo 401(k) plans, and other retirement arrangements.
Consider an HSA if You Are Eligible
A Health Savings Account can offer unusually favorable tax treatment for taxpayers covered by a qualifying high-deductible health plan.
For 2026, the HSA contribution limit is $4,400 for self-only coverage and $8,750 for family coverage. Additional catch-up contributions may be available for eligible individuals age 55 or older.
HSA contributions may be deductible, earnings can grow tax-free, and withdrawals used for qualified medical expenses can generally be tax-free.
Unlike many use-it-or-lose-it health benefits, money in an HSA can remain in the account from year to year.
Revisit Charitable Giving
Charitable giving becomes particularly interesting in 2026.
Beginning in 2026, taxpayers who do not itemize deductions may be able to deduct qualifying cash contributions to eligible charitable organizations, up to $1,000 for an individual or $2,000 for married taxpayers filing jointly.
Taxpayers who itemize may have additional planning opportunities. Depending on the circumstances, donating appreciated securities instead of cash can be worth considering. Some taxpayers may also benefit from grouping charitable contributions into a particular year or using a donor-advised fund.
The important point is that the tax rules should complement charitable intentions, not drive them.
Buying a New Vehicle? Look at the Car Loan Interest Deduction
The federal clean vehicle credit may be gone for new purchases, but another vehicle-related tax benefit is now available.
Eligible taxpayers may deduct up to $10,000 of qualified interest paid on a loan used to purchase a qualifying new vehicle for personal use.
The deduction can potentially be claimed whether the taxpayer itemizes or takes the standard deduction. However, there are important requirements, including rules concerning the vehicle, the loan, final assembly in the United States, and the taxpayer's income.
This is a good example of why taxpayers should look at the current tax rules before making a major purchase rather than relying on what they remember from previous years.
Homeownership Can Still Produce Tax Benefits
The expiration of the residential energy credits does not mean that homeownership has lost all of its tax advantages.
Taxpayers who itemize may still be able to deduct qualifying mortgage interest and state and local taxes, including real estate taxes, subject to applicable limitations.
The state and local tax deduction rules have also changed significantly from the $10,000 limitation many taxpayers became accustomed to in previous years.
Again, these deductions generally should not be a reason to incur an unnecessary expense. But they should be considered when evaluating the tax consequences of expenses you were already planning to pay.
Do Not Forget Credits Based on Expenses You Already Have
Tax planning does not always require buying something.
For example, the Child and Dependent Care Credit was enhanced for 2026. Taxpayers paying qualifying expenses so that they can work or look for work should determine whether they are eligible.
Depending on your individual circumstances, education expenses, dependent-care expenses, business expenditures, retirement savings, charitable giving, and other transactions may provide tax benefits without making an unnecessary year-end purchase.
Sometimes the Best Tax Move Is Not Spending Money
Different spouse-relief provisions have different deadlines. If a refund has been offset, or you receive an IRS notice involving a joint tax liability, it is important to review your options promptly. Waiting can limit the relief or refund that may be available.
Year-End Planning Should Be Personal
There is no single best place to put extra money for tax purposes.
For one taxpayer, increasing a retirement contribution may make sense. For another, an HSA contribution may be more valuable. Someone already planning substantial charitable gifts may want to reconsider how and when those gifts are made. A taxpayer buying a new vehicle may want to investigate the new car loan interest deduction.
The important point is to plan before December 31 rather than discovering opportunities after the year has ended.
The disappearance of the clean energy and EV credits does not mean tax planning opportunities have disappeared with them. It simply means the opportunities have changed.
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.
Clean Energy and Electric Vehicle Tax Credits in 2026
Federal tax credits for clean energy improvements and electric vehicles continue to generate interest, but the rules can be complex and subject to change. As 2026 begins, taxpayers considering energy-efficient upgrades or vehicle purchases should understand which credits may still apply and what documentation is required.
Residential Clean Energy Credits
Tax credits may be available for certain qualifying home improvements, such as energy-efficient heating and cooling systems, insulation, and renewable energy installations. Eligibility often depends on the type of improvement, when the property is placed in service, and whether specific efficiency standards are met.
Electric Vehicle Credits
Electric vehicle tax credits can vary significantly based on vehicle eligibility requirements, income limitations, and dealer reporting rules. Not all vehicles qualify, and eligibility can change over time, making advance planning especially important.
Documentation Matters
Clean energy and electric vehicle credits often require detailed records, including receipts, manufacturer certifications, and vehicle documentation. Without proper substantiation, credits may be delayed or disallowed during return processing.
A Cautious Planning Reminder
While tax credits can provide meaningful savings, they should not be the sole factor driving major financial decisions. Reviewing eligibility and timing before making a purchase can help ensure credits are claimed correctly and reduce surprises at filing time.
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.