How to deduct electricity expenses on your income tax return

If you're self-employed, you can deduct part of your electricity bill as long as the energy consumption is related to your professional activity. Plus, if you've carried out improvements in your home’s energy efficiency, you may be eligible for additional benefits, thus achieving even greater savings.

Taking advantage of these incentives not only reduces expenses but also promotes responsible energy consumption. Below, we explain which expenses can be deducted, how to apply them, and what steps to follow to correctly include them on your personal income tax return.

What expenses are deductible?

Electricity expenses can be deducted if they are related to an economic activity or to energy efficiency improvements in the property. In general terms, the following are included:

• Electricity consumption for self-employed individuals: if you work from home or a commercial space, you can deduct a percentage of your electricity bill.
• Investments in energy efficiency: such as installing solar panels, improving thermal insulation, and implementing systems that optimise energy consumption.
• Electric expenses in rental properties: if the contract specifies that the landlord is responsible for covering utilities, these may be included as deductible expenses.

There are specific requirements in each case, so it’s important to check how to correctly apply each deduction.

Electricity deductions for self-employed individuals

If you’re self-employed and your professional activity requires electricity consumption, you can deduct part of your bill on your income tax return, as long as certain criteria are met:

Requirements for deduction

• An invoice in the name of the self-employed individual: the invoice must be issued in the professional's name and be related to their economic activity. If the home or commercial space is not registered as part of the business, the deduction may be declined.
• Professional use: you must prove that the electricity consumption is essential to your professional activity. Before registering as a self-employed individual, you must inform the Tax Agency of the percentage of your home dedicated to your professional activity by submitting form 036 or 037.

Deductible expenses

As we mentioned earlier, the Tax Agency allows a portion of electricity supply expenses to be deducted if they are related to a professional activity:

• Deduction percentage: self-employed individuals working from home may deduct 30% of electricity expenses corresponding to the portion of the home used for work. For example, if your office takes up 20% of the total surface area, the deduction would apply to that percentage.
• Workspaces: you may deduct the full expense for a commercial space if your business activity is entirely carried out on-site and the utility contracts are in your name as a self-employed individual.

Deductions for energy efficiency improvements

If you’ve carried out improvements to reduce your home’s energy consumption, you may also be eligible for certain income tax deductions:

Types of deductible construction works

Installation of solar panels

Investment in photovoltaic energy is deductible, as we explain in the following content: IRPF tax deductions for installing solar panels in 2025.

Improvements in insulation

Replacing windows with high-efficiency models, installing insulating doors, and applying thermal cladding—such as ventilated façades, interior insulation, or thermal paints, among other solutions—to reduce energy demand and improve the efficiency of the home or workspace.

Eligibility requirements for the deductions

Energy certification

One of the key requirements is to have an energy efficiency certificate, both before and after the construction work. This document certifies the improvement in the home's energy consumption following the intervention. It also proves that the renovation has had a positive impact on reducing energy consumption.

The certificate must be issued by an authorised technician before 31 December 2025, and it must reflect the savings achieved. Moreover, the improvement must meet the minimum thresholds required for the deduction to apply.

The deduction amounts to 60%, with a maximum annual deduction base of €5,000. Any amounts paid that exceed this annual limit may be deducted, under the same limit, over the following four years. However, the total deduction base may not exceed €15,000.

Please note that any construction work carried out in the part of the home used for business purposes does not qualify for this deduction.

Regulatory compliance

In order for the construction work to be considered deductible, it must comply with current energy efficiency regulations and fall within the legal framework established by the Spanish Government and the European Union.

This means that the materials and techniques used must adhere to sustainability and energy-saving standards. Moreover, the intervention must be properly registered.

Other deductions related to electricity

In addition to income tax deductions, there are other grants and benefits available for energy efficiency improvements, both for individuals and businesses:

Grants and subsidies

Grants for the installation of energy efficiency systems can be combined with tax deductions; however, it is important to note that any aid received must be subtracted from the total amount when calculating the deduction in the income tax.

Some of the main grants available include:

• Next Generation EU funds: aimed at energy rehabilitation of buildings and homes, with incentives for installing thermal renewable energy systems.
• PREE 5000 programme: grants for improving energy efficiency in municipalities with fewer than 5,000 inhabitants.
• Regional aid: each autonomous community may offer specific incentives for the installation of solar panels, thermal insulation, and energy management systems.

Energy efficiency deductions for businesses

Businesses can deduct investments aimed at reducing electricity consumption, provided they meet the requirements set out in current regulations.

Deductible investments include:

• LED lightning: replacing traditional systems with LED technology to reduce energy use.
• Automation and energy management: implementing smart systems to optimise electricity use in offices, factories, and retail spaces.
• Installation of renewable energy systems: businesses that install solar panels or thermal systems can benefit from specific deductions and subsidies.

To access these benefits, we recommend checking the available aid programmes through the Tax Agency and the Spanish Government's Institute for the Diversification and Saving of Energy (IDAE), as the conditions may vary depending on the region and the type of investment.

Process for claiming deductions

To claim the electricity expense deduction on your income tax return, you must follow a series of steps to ensure that the Tax Agency accepts the tax benefit without any issues:

1. Gather documentation: keep all electricity bills, supply contracts, and energy efficiency certificates if you have made energy improvements to your home or workplace. This documentation will be essential to justify the deduction.
2. Complete the tax return form: enter any deductible expenses in the relevant section of the Spanish income tax return (IRPF), ensuring they meet the legal requirements. If you are self-employed, apply the relevant deduction percentage for the space allocated to your professional activity.
3. Submit the return: complete the filing within the deadline established by the Tax Agency (before 30 June) to avoid potential penalties or the loss of the right to claim the deduction. If you have any questions, you can seek advice from a tax consultant or use the assistance available on the Tax Agency’s online platform.

Tips to maximise your tax benefits

To optimise your deductions and avoid errors, it’s important to follow certain best practices.

• Keep a record of expenses: maintain a detailed log of any consumption related to your professional activity, including utility bills, energy efficiency investments, and any other potentially deductible expenses.
• Seek advice from a tax consultant: a specialist can help you identify all available deductions, ensuring that you make the most of your tax benefits without making mistakes that could lead to a review or adjustment by the Tax Agency.