Tax Credits & Rebates Calculator
Check what federal tax credits and state rebates you qualify for when upgrading your heating or cooling system.
Tax Credits & Rebates Calculator
Select your upgrade type and location to see available incentives.
Federal HVAC Tax Credits Under the Inflation Reduction Act
The Inflation Reduction Act (IRA), signed into law in 2022, provides significant tax credits for energy-efficient home improvements through 2032. Here's what's available for HVAC upgrades:
Energy Efficient Home Improvement Credit (25C)
This credit covers 30% of the cost of qualifying equipment and installation, up to these annual limits:
- Heat pumps (air-source or geothermal): Up to $2,000 per year
- High-efficiency furnaces (95%+ AFUE): Up to $600 per year
- Central air conditioners (16+ SEER2): Up to $600 per year
- Heat pump water heaters: Up to $2,000 per year
- Biomass stoves/boilers: Up to $2,000 per year
The overall annual cap is $3,200: $1,200 for most improvements plus an additional $2,000 specifically for heat pumps and heat pump water heaters. Credits reset every tax year, so you can claim across multiple years.
Efficiency Requirements
Not all HVAC equipment qualifies. Minimum efficiency requirements include:
- Gas/oil furnaces: 95% AFUE or higher (most standard 80% units do NOT qualify)
- Central AC: 16 SEER2 / 13.5 EER2 or higher
- Air-source heat pumps: Must meet CEE highest tier (currently 16 SEER2 / 9.0 HSPF2)
- Water heaters: Gas must be ENERGY STAR certified; heat pump water heaters must meet CEE requirements
State and Utility Rebates Stack
Federal tax credits can be combined with state and utility rebates. Many states offer $200–$1,000 for high-efficiency furnaces, and utilities frequently offer $300–$800 for heat pump installations. Some homeowners save $2,000–$4,000 total by stacking all available incentives.
How to Claim
File IRS Form 5695 (Residential Energy Credits) with your annual tax return. Keep your receipt, the manufacturer's certification statement, and your installer's documentation as proof. The credit reduces your tax bill dollar-for-dollar — it's not a deduction, it's a credit.
To see what a new high-efficiency furnace would cost before credits, use our replacement cost calculator. To calculate your annual savings from a more efficient unit, try the energy savings calculator.
Frequently Asked Questions
What HVAC tax credits are available?
The Inflation Reduction Act (IRA) provides 30% tax credits up to $2,000 for heat pumps and $600 for high-efficiency furnaces, ACs, and water heaters. These credits are available through 2032.
Do I qualify for the federal tax credit?
You must own the home and it must be your primary residence. The equipment must meet minimum efficiency requirements: furnaces need 95%+ AFUE, ACs need 16+ SEER2, and heat pumps need specific CEE tier ratings.
Can I combine federal and state rebates?
Yes. Federal tax credits and state/utility rebates stack. Some homeowners save $2,000–$4,000 by combining both programs when upgrading to a heat pump system.
How do I claim the tax credit?
File IRS Form 5695 (Residential Energy Credits) with your annual tax return. Keep your receipt, manufacturer certification statement, and installer documentation as proof.
What is the annual limit?
The annual limit for energy-efficient home improvements is $3,200 ($1,200 for most items + $2,000 for heat pumps/heat pump water heaters). Credits reset each tax year.
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