45L Tax Credit Explained: What Home Builders in Texas Need to Know (2026)
Texas home builders who construct energy-efficient homes can claim a federal tax credit of up to $5,000 per home under Section 45L of the Internal Revenue Code. The Inflation Reduction Act of 2022 expanded the credit and extended it through 2032, making it one of the most direct financial benefits available to residential builders today.
Here is what the credit means for builders in the Rio Grande Valley and across South Texas in 2025 and 2026.
What Is the 45L Tax Credit?
Section 45L gives builders and contractors a dollar-for-dollar reduction in federal tax liability for each energy-efficient home they construct or substantially reconstruct. That distinction matters — a tax credit reduces what you owe the IRS directly, not just your taxable income.
The 45L credit belongs to the builder, not the homebuyer. The homebuyer receives no portion of the credit at closing. The builder claims it on their federal tax return for the year in which the home is sold or leased for residential use.
How Much Is the 45L Credit Worth in 2026?
The updated credit amounts from the Inflation Reduction Act took effect January 1, 2023, and remain in place through December 31, 2032.
| Home Type | Certification Level | Credit Amount |
|---|---|---|
| Single-family home | ENERGY STAR certified | $2,500 |
| Single-family home | DOE Zero Energy Ready Home | $5,000 |
| Manufactured home | ENERGY STAR certified | $2,500 |
| Multifamily unit (1–4 units) | ENERGY STAR certified | $500 |
| Multifamily unit (5+ units) | ENERGY STAR certified + prevailing wage | $2,500 |
| Multifamily unit (5+ units) | DOE Zero Energy Ready + prevailing wage | $5,000 |
Note for multifamily builders: Projects with five or more units must meet prevailing wage requirements during construction to qualify for the higher credit amounts. Missing that threshold drops the credit to the base tier.
There is no cap on the number of homes a builder can claim. A builder who closes 50 ENERGY STAR-certified homes in a single tax year can claim $125,000 in federal tax credits for that year alone.
Does Built to Save® Certification Qualify for the 45L Credit?
Yes — in many cases. Built to Save® is a home energy efficiency certification program sponsored by Magic Valley Electric Cooperative (MVEC) for builders in the Rio Grande Valley. RESNET-certified HERS raters verify each home, and qualifying homes earn a HERS Index Score of 63 or below.
A HERS score of 63 or lower, combined with certification from an approved ENERGY STAR verifier, can meet the requirements for the $2,500 ENERGY STAR tier of the 45L credit.
What the Rater Verification Requirement Means for You
The IRS requires a RESNET-certified HERS rater — or an equivalent qualified energy rater — to inspect and certify each home before a builder can claim the credit. Builders cannot self-certify. The rater’s documentation must be kept as part of your tax records.
Built to Save® certified homes already go through this third-party verification process. Builders working to Built to Save® standards get that required inspection built into the program — not added as a separate cost.
How Builders Claim the 45L Credit
Claiming the 45L credit requires the following steps:
1. Ensure the home meets a qualifying certification standard
The home must receive ENERGY STAR or DOE Zero Energy Ready certification before it is sold or leased. A qualified third-party rater must complete this certification.
2. Confirm the acquisition date
The home must be acquired for use as a residence before January 1, 2033. “Acquired” refers to the date of sale or the date a lease begins. A home built but not sold before the deadline does not qualify.
3. Complete IRS Form 8908
The 45L credit is claimed on IRS Form 8908 (Energy Efficient Home Credit), filed with your federal income tax return for the year each qualifying home is sold or leased. Each unit is listed separately on the form.
4. Retain all supporting documentation
Keep the following records in case of audit:
- Third-party rater certification report
- HERS rating documentation
- ENERGY STAR or DOE Zero Energy Ready certification certificate
- Proof of sale date (closing documents or lease agreement)
5. Work with a tax professional familiar with energy credits
The 45L credit interacts with depreciation schedules and other business credits in ways that vary by builder situation. A CPA or tax advisor with residential construction experience can help you capture the full benefit and stay clear of disqualification.
Stacking Incentives: 45L + MVEC Rebates + AEP Texas Incentives
The 45L credit works alongside — not instead of — other incentive programs. Builders in the Rio Grande Valley can layer multiple programs to maximize the financial return on each home built.
Magic Valley Electric Cooperative (MVEC) Rebates
MVEC offers rebates to builders and homeowners who install qualifying high-efficiency equipment, including HVAC systems, insulation, and smart thermostats. Built to Save® certified homes are built to meet or exceed MVEC rebate thresholds, so builders can capture both the certification benefit and the utility rebate from a single project.
AEP Texas Incentives
AEP Texas, the other major electric utility serving parts of South Texas, provides energy efficiency rebates for new construction and qualifying equipment upgrades. Builders in AEP Texas service territory should verify current program availability and requirements directly with AEP.
How the Stack Works
A single-family home that earns Built to Save® certification, meets ENERGY STAR standards, and includes qualifying MVEC-rebated equipment could generate:
- $2,500 — federal 45L tax credit (ENERGY STAR tier)
- $500–$1,500+ — MVEC equipment and new construction rebates (amounts vary by program year)
- Lower utility bills — a selling point that supports higher home prices or faster sales
Builders who pursue DOE Zero Energy Ready certification can increase the federal credit to $5,000 per home, with the same stacking opportunities available.
Frequently Asked Questions
Who gets the 45L tax credit — the builder or the homebuyer?
The builder claims the 45L tax credit on their federal return using IRS Form 8908. The homebuyer receives no portion of the credit. Some builders factor the credit’s value into their pricing or sales materials, but the credit itself flows to the builder.
Does Built to Save® certification qualify for the 45L credit?
Built to Save® certified homes with a HERS Index Score of 63 or below, verified by a RESNET-certified rater, are generally positioned to meet the ENERGY STAR certification requirements for the $2,500 45L credit tier. However, the IRS requires specific documentation from a qualified rater — Built to Save® certification alone is not automatically sufficient. Builders should confirm full compliance with their HERS rater and tax advisor before filing.
How do I claim the 45L tax credit as a builder?
File IRS Form 8908 with your federal income tax return for the year each qualifying home is sold or leased. Third-party rater certification documentation must be on file before you claim the credit. A tax professional with construction industry experience can complete the filing correctly.
Is there a limit on how many 45L credits a builder can claim?
No. The program sets no cap on the number of homes or total credit amount per builder per year. Each qualifying home generates its own credit — $2,500 for ENERGY STAR or $5,000 for DOE Zero Energy Ready. High-volume builders can accumulate substantial credits across a full construction season.
When does the 45L tax credit expire?
Under current law, the 45L credit applies to homes acquired for use as a residence before January 1, 2033. Builders have a multi-year window through the end of 2032. Tax law can change; check with a tax advisor for the most current information as you plan future projects.
Build to a Higher Standard — and Claim the Credits You've Earned
The 45L credit pays builders who already set out to build energy-efficient, comfortable homes for the South Texas climate. Built to Save® certification puts you on the path to qualifying, with the third-party verification process built into the program from the start.
Ready to make the 45L credit part of your business model?
Not sure where to start? and see how the program works from application to certificate.
Build to a Higher Standard — and Claim the Credits You’ve Earned
The 45L credit pays builders who already set out to build energy-efficient, comfortable homes for the South Texas climate. Built to Save® certification puts you on the path to qualifying, with the third-party verification process built into the program from the start.
Ready to make the 45L credit part of your business model?
Not sure where to start? and see how the program works from application to certificate.
This page is for informational purposes only and does not constitute tax or legal advice. Credit amounts, eligibility requirements, and program rules are subject to change. Consult a qualified tax professional before claiming any federal tax credit.