Summary: Several major federal tax incentives are set to expire or phase down soon. Take advantage of these opportunities and maximize tax savings before the due date.
No Tax Savings Left Behind
As decades-old tax incentives approach their expiration, many federal tax credits, such as the Work Opportunity Tax Credit (WOTC) and the Federal Empowerment Zone Employment Credit, are scheduled to sunset at the end of 2025. Recent legislation in the One Big Beautiful Bill (OBBB) has accelerated the timeline for several other deductions as well, saddling them with earlier end dates than initially planned.
Whether you’ve claimed these credits for years or are just discovering them, there’s still time to maximize tax savings. Read below to learn about eligibility, benefits, and how to claim these incentives before it’s too late.
The Work Opportunity Tax Credit (WOTC)
The WOTC incentivizes employers to hire individuals from certain targeted groups who have faced or currently face employment challenges.
- Eligibility:
- Employers who hire individuals for targeted groups, including:
- Veterans
- Long-term unemployed
- SNAP recipients
- Former felons
- Residents of empowerment zones
- Benefit:
- Up to $9,600 per qualified hire
- Deadline:
- December 31, 2025
Employers must submit IRS Form 8850 to their state workforce agency within 28 days of the hire date to qualify to claim the credit.
Federal Empowerment Zone Employment Credit
This credit is offered to businesses that operate in designated urban and rural empowerment zones to encourage the hiring of employees who both live and work in the zone.
- Eligibility:
- Businesses located in empowerment zones
- Benefit:
- Up to 20% of $15,000 in wages per qualified employee—or $3,000 per employee annually.
- Deadline:
- December 31, 2025
To claim this credit, businesses must verify their zone location and claim the credit on their annual tax return.
Section 45L Energy Efficient Home Credit
Taxpayers who build energy-efficient homes can claim Section 45L tax credit, though each build must attain certification from either the Environmental Protection Agency’s (EPA) ENERGY STAR program or the Department of Energy’s (DOE) Zero Energy Ready Homes (ZERH) program.
- Eligibility:
- Builders and developers of ENERGY STAR or ZERH homes
- Benefit:
- $500—$5,000 per qualifying unit
- Deadline:
- June 30, 2026
Businesses engaged to build energy efficient homes should accelerate project planning and approvals to start construction before the due date or risk losing substantial tax savings. Homes under construction before May 12, 2025, may qualify through the end of 2026. The credit value varies depending on:
- Which program the home is certified through
- The type of home (single family vs. manufactured vs. multifamily)
- Whether the multifamily homeowner meets the prevailing wage requirements
To claim this credit, taxpayers must certify the home and claim the credit either when the home is sold or leased.
Section 179D Energy Efficient Commercial Buildings Deduction
The Section 179D tax credit provides a deduction for energy-efficient improvements to commercial buildings. Improvements must reduce energy costs by at least 25% to qualify.
- Eligibility:
- Building owners and architects, engineers, or contractors of government or tax-exempt projects
- Benefit:
- $5.81 per square foot
- Deadline:
- June 30, 2026
Eligibility is tied to the construction start date, so building owners and developers should accelerate relevant projects to start construction before the due date. To claim this credit, taxpayers must perform energy modeling, secure an allocation letter (for government and nonprofit projects), and claim the deduction on their income tax return for the year the property is placed in service.
Section 30C Alternative Fuel Vehicle Refueling Property Credit
The Section 30C credit incentivizes taxpayers to install electric vehicle (EV) charging stations or other alternative fuel refueling property in eligible census tracts, such as low-income or non-urban areas.
- Eligibility:
- Businesses, individuals, and tax-exempt entities
- Benefit:
- 30% of costs (up to $1,000 per charger for individuals; up to $100,000 per charger)
- Deadline:
- June 30, 2026
Individuals claiming the credit must file Form 8911, while businesses must satisfy requirements for prevailing wage and apprenticeship compliance to claim the full 30%—or else their credit will be reduced to 6%.
Final Thoughts: Claim These Incentives Before It’s Too Late
Navigating the eligibility requirements, due dates, and filing methodologies for these tax credits can be overwhelming, especially for small businesses and individuals with fewer resources. An experienced tax team can help light the load by determining whether you’re eligible, gathering the necessary documentation, guiding you through sub-processes, and helping prepare the necessary tax documents.
With the due dates rapidly approaching, it’s time to lock in and claim these tax credits. If you think you or your business may be eligible, contact a trusted tax professional to learn next steps.