Air-Source Heat Pump
To be eligible for the 30% tax credit, an air-source heat pump it must be purchased and installed between January 1, 2023, and December 31, 2032, and meet the following criteria:
- SEER2 rating greater than or equal to 16
- EER2 rating greater than or equal to 12
- HSPF2 rating greater than or equal to 9
If the system meets these criteria, the homeowner can claim 30% of the installation cost, not to exceed $2,000.
Central Air Conditioner
For split systems, a SEER2 rating of 16 or greater qualifies for a tax credit, and all Energy Star-certified packaged systems are also eligible. Central air conditioners are eligible for 30% of the project cost as a tax credit, not to exceed $600.
Natural Gas Furnaces
The criteria your furnace must meet to qualify for a tax credit vary depending on the type of fuel it uses.
- Gas furnaces must be Energy Star-certified and have an AFUE of 97% or greater. Furnaces that meet these requirements and are installed between 2023 and 2032 are eligible for credits equal to 30% of the project cost of up to $600.
How To Qualify For and Claim HVAC Tax Rebates
You can claim your residential energy tax incentive when you file your federal income taxes. For federal tax returns filed between 2023 and 2032, you are eligible to claim a credit equal to 30% of the cost of your installation. The dollar limit that this credit maxes out at varies depending on what’s being upgraded. For example, furnaces qualify for a 30% installation cost credit of up to $600, while you can claim up to $600 for a qualifying AC.
Here’s how to claim your HVAC tax credit when you file your federal income tax return:
- Keep a copy of your installation records and your manufacturer’s certification statement proving the efficiency of your system. You won’t qualify for the rebate program without them.
- Download and complete IRS Form 5695. Fill out the relevant section or sections of the form depending on what you’ve upgraded.
- If you’ve added multiple upgrades during the year, you can claim multiple rebates using the same Form 5695. You don’t need to submit a unique form for each upgrade. However, note that there is an annual limit of $3,200 for efficiency tax credits.
- File these forms when you file your federal taxes. Your tax professional can assist you in ensuring you can claim the maximum refund each year during the tax preparation period.
Are energy tax credits refundable?
Energy tax credits aren’t refundable tax credits. This means that you can reduce your total tax to zero if you have a large enough credit. But, you can’t get any excess credit amount as a payment to you on your tax return if you have more energy credit than your total tax. Any unused energy tax credit claimed on your tax return can roll forward to future years and offset tax liability in those years.
