Yes, HVAC systems can qualify for energy tax credits if they meet specific energy efficiency standards outlined by the IRS and ENERGY STAR programs.
Upgrading your HVAC system could save you thousands through federal energy tax credits. The Inflation Reduction Act expanded incentives for qualifying HVAC installations through 2032. Here’s what homeowners need to know about claiming these valuable credits.
HVAC Systems That Qualify for Energy Credits
Several types of HVAC equipment may qualify for tax credits when installed in primary or secondary residences:
- Central air conditioners (must meet SEER2 ≥ 17.0 and EER2 ≥12.0 starting 2025)
- Heat pumps (air-source and geothermal)
- Heat pump water heaters
- Furnaces and boilers (natural gas, propane, or oil)
- Biomass stoves and boilers
For example, a qualifying built-in gas heater installation could earn you a credit, while a decorative electric heater would not qualify.
Credit Amounts for HVAC Systems
| System Type | Credit Percentage | Maximum Credit |
|---|---|---|
| Heat pumps/heat pump water heaters | 30% | $2,000/year |
| Central AC/furnaces/boilers | 30% | $600/year |
| Biomass stoves | 30% | $2,000/year |
Eligibility Requirements
Property Requirements
The home must be:
- Located in the United States
- Your primary residence or second home (rental properties don’t qualify)
- Existing homes only (new construction has different rules)
Installation Requirements
To qualify:
- Equipment must meet ENERGY STAR efficiency standards
- Must be installed between January 1, 2023 – December 31, 2032
- Starting in 2025, manufacturers must be registered with the IRS
How to Claim HVAC Energy Credits
Follow these steps to claim your tax credit:
- Keep all receipts and manufacturer certification statements
- Complete IRS Form 5695 when filing your taxes
- Attach the form to your Form 1040
- Report the credit on Schedule 3 (Form 1040)
The IRS website provides detailed instructions, while ENERGY STAR maintains updated lists of qualifying products.
Strategic Planning for Maximum Savings
Since the credit has annual limits but no lifetime limit, consider spreading improvements over multiple years:
- Year 1: $2,000 heat pump + $600 windows
- Year 2: $2,000 heat pump water heater
- Year 3: $600 insulation + $500 doors
This approach could yield $5,700 in credits versus trying to claim everything in one year (limited to $3,200).
Additional Savings Opportunities
Many states and utilities offer rebates that can be combined with federal credits. Always check for local incentives before making energy upgrades.
