If you’re a homeowner in Tennessee, you’ve probably noticed your energy bills creeping higher and higher, especially during those humid summers and chilly winters we get here in the Volunteer State. With rising utility costs, unpredictable weather, and a growing push toward sustainability, more folks than ever are asking the same question:
“How can I make my home more energy-efficient and save money while doing it?”
Good news! 2025 is packed with energy-efficiency tax credits, rebates, and incentives. Federal and TVA programs offer big savings for upgrades like insulation, HVAC systems, solar panels, or energy-efficient windows. This guide covers everything you need to know!
Let’s break it all down so you can make smart decisions and keep more money in your pocket.
Why Energy Efficiency Matters in Tennessee
You already know Tennessee weather is no joke. From hot, sticky summers to freezing cold snaps in winter, your home’s energy usage goes through the roof if it’s not properly insulated or running on outdated systems.
And when your home isn’t energy-efficient, you’re not just losing comfort, you’re literally throwing money away every month in higher power bills. According to energy.gov, heating and cooling typically account for over 50% of your energy use, and poor efficiency can cause those costs to spike even higher.
But here’s the upside: Tennessee is in a unique position thanks to TVA programs and generous federal tax credits that can help you offset the cost of upgrades significantly.
2025 Federal Tax Credits for Energy-Efficient Upgrades
Let’s start with the federal side of things, because these incentives can add up fast.
Energy Efficient Home Improvement Credit (Section 25C)
In 2025, you can claim up to $3,200 annually in tax credits for qualified home energy-efficiency upgrades through the Energy Efficient Home Improvement Credit.
Here’s how it breaks down:
- $1,200 cap annually for upgrades like insulation, energy-efficient doors/windows, and home energy audits
- $2,000 cap for high-efficiency heat pumps, heat pump water heaters, and biomass stoves
What qualifies?
- Insulation (batts, rolls, expanding spray, blow-in, etc.)
- Energy-efficient windows and doors
- ENERGY STAR-rated HVAC systems
- Electric panel upgrades (up to $600)
- Home energy audits (up to $150)
The best part? This credit resets every year, so if you spread out your upgrades, you can keep getting credit year after year.
Residential Clean Energy Credit (Section 25D)
Thinking of going solar? This one’s for you.
You can claim 30% of the cost of eligible systems installed through 2032. That includes:
- Solar panels (photovoltaics)
- Solar water heaters
- Geothermal heat pumps
- Battery storage (like Tesla Powerwall)
There’s no dollar cap for this one—30% is 30%, no matter how big the system.
Tennessee-Specific Incentives: TVA’s EnergyRight® Program
The Tennessee Valley Authority (TVA) partners with local power companies to offer EnergyRight® incentives for energy-efficiency upgrades across Tennessee.
If your home qualifies, you could receive:
- Rebates for installing qualifying heat pumps
- Free or discounted home energy evaluations
- Guidance on certified local contractors
- Recommendations tailored to your specific home needs
TVA also supports low-income households with weatherization help, often at no cost to you. You’ll want to check eligibility and apply through your local power company, which partners with TVA directly.
Visit energyright.com to see current rebates in your ZIP code.
Combine Federal Credits and TVA Rebates for Bigger Savings
Here’s where it gets good: you can stack TVA incentives with federal tax credits. That means you can get a rebate upfront and still claim part of the cost on your taxes the following year.
Example:
Let’s say you install a new heat pump system that costs $8,000.
- TVA offers a $500 rebate
- You qualify for a $2,000 federal tax credit
- You only pay $5,500 in the end, and you’ll likely save hundreds per year in energy costs going forward.
What Energy-Efficient Upgrades Should Tennessee Homeowners Prioritize?
Here are some of the smartest investments for your home in 2025:
1. High-Efficiency Heat Pumps
They’re efficient for both heating and cooling, a win for Tennessee’s mixed climate.
2. Insulation & Air Sealing
This keeps conditioned air inside where it belongs and reduces your energy use dramatically.
3. Energy-Efficient Windows & Doors
No more cold drafts in winter or heat waves rolling in during summer.
4. Solar Panels & Battery Storage
Ideal for long-term savings and future-proofing your home.
5. Smart Thermostats
Small investment, big results, especially when paired with efficient HVAC systems.
Best Energy-Efficient Product Manufacturers
Choosing the right product is just as important as choosing the right system. Here are some of the most trusted brands in the industry, known for performance, reliability, and eligibility for rebates/tax credits.
Top Energy-Efficient Manufacturers
- Lennox: Industry leader in ultra-efficient HVAC systems and smart thermostats
- Trane: Trusted for powerful performance and energy savings in all climates
- Carrier: Known for innovation and ENERGY STAR-rated systems
- Andersen Windows: Long-standing reputation for top-tier, energy-efficient window solutions
- Owens Corning: Premium insulation materials that help maximize home comfort and efficiency
- Panasonic Solar: Reliable solar panels and home battery systems
- LG Energy Solution: High-efficiency battery storage and solar systems
- Daikin: Great for ductless mini-split systems in homes without traditional ductwork
Our Expert Team Has You Covered
We’ve been helping Tennessee homeowners make their homes more energy-efficient for years. Our team knows exactly how to help you maximize your savings, choose the best systems, and make sure every detail is handled with precision.
As with anything in life, working with the best gets you the best results—and that pays off in the long run. If you’re ready to tackle your energy-efficient upgrade the right way, we’re here to help.
Contact us at (615) 861-2315 to get started.
Frequently Asked Questions
How do I know if I qualify for federal energy tax credits?
If you’re installing qualifying ENERGY STAR-certified equipment or materials in your primary residence, you likely qualify. Always keep your receipts and talk to a tax professional.
Can I get both TVA rebates and a federal tax credit for the same upgrade?
Yes! You can absolutely claim both. Just be sure to document everything and report the correct amount on your tax return (minus any rebates received).
How much money can I actually save?
It depends on what upgrades you make. Some homeowners save 30-50% on energy costs after upgrading HVAC and insulation.
Do I need to replace everything at once to qualify?
Nope. You can spread upgrades over time and claim tax credits each year, up to the annual limits.
Are solar panels really worth it in Tennessee?
Yes, especially with federal tax credits still at 30%. Plus, solar can protect you from future utility price increases.
How long does it take to complete a typical energy upgrade?
Most projects take just a few days to complete. Larger ones (like solar installs) may take 1–2 weeks, including inspections.
What’s the difference between a tax deduction and a tax credit?
A tax credit directly reduces your tax bill dollar-for-dollar. A deduction just lowers your taxable income. Credits are better.
Can I finance energy-efficiency upgrades?
Yes! Many homeowners use low-interest financing or even PACE programs. Just ask us about the options when you call.
Final Thoughts: Take Advantage of 2025’s Incentives While You Can
Federal tax credits and TVA incentives are some of the best tools you have to lower the cost of energy-efficiency upgrades in your home. Whether you’re replacing an old HVAC system, installing solar, or sealing up drafts, 2025 is a golden opportunity to make your home more comfortable and more affordable.
And don’t wait too long, while some of these programs are set to last, budgets can run out, and policies change.
If you’re ready to make a smart move for your home and wallet, give us a call. We’ll walk you through everything and make sure the job gets done right.
Contact us at (615) 861-2315 to kickstart your window installation project today.