Upgrading your HVAC system in 2025 could come with significant savings, thanks to federal tax credits. If you’re considering a new system, understanding which models qualify can help you maximize your investment while improving your home’s comfort and efficiency.
Understanding Energy Tax Credits
The Inflation Reduction Act (IRA) introduced tax credits that reward homeowners for choosing energy-efficient heating and cooling equipment. Through the Energy Efficient Home Improvement Credit (25C), you may be eligible for a tax credit of up to 30% of the total cost of qualifying HVAC equipment, with a maximum of $600 for air conditioner and furnace installations and up to $2,000 for heat pumps.
What HVAC Systems Qualify?
To take advantage of the tax credit, the system you install must meet specific energy efficiency requirements set by the Department of Energy. Eligible systems include:
- Air Conditioners: Must meet the highest efficiency tiers set by the Consortium for Energy Efficiency (CEE). Look for ENERGY STAR certified models that meet these criteria.
- Furnaces: Gas furnaces must have an annual fuel utilization efficiency (AFUE) of at least 97% to qualify.
- Heat Pumps: Both air-source and geothermal heat pumps qualify if they meet ENERGY STAR’s highest efficiency standards. Heat pumps often qualify for the maximum $2,000 credit.
- Advanced Thermostats: Some smart thermostats may also qualify when installed as part of an eligible system.
How to Claim the Tax Credit
To claim your tax credit, keep a copy of your purchase receipt and the Manufacturer’s Certification Statement, which confirms that the system meets federal efficiency requirements. When filing your taxes, use IRS Form 5695 to apply for the credit.
Why Upgrade Now?
Replacing an outdated system not only helps you save on energy bills but also provides a more comfortable and consistent indoor climate. With tax credits available, 2025 is a great time to invest in a high-efficiency system that lowers energy consumption and reduces long-term costs.
Upgrade Your HVAC System with CDL Mechanical in Glendale, AZ
Talk to a tax professional for all the details on rebates and credits. Then, if you’re ready to install a new energy-efficient AC system or heater, our team at CDL Mechanical is here to help. We offer expert installation of qualifying systems, making sure you get the best performance and savings. Contact us today to schedule a consultation and find the perfect system for your home.
