HVAC Tax Credit and Incentive Checker

What changed after 2025

Two federal credits covered home heating and cooling equipment:

• The Energy Efficient Home Improvement Credit (section 25C): 30 % of the cost of qualifying heat pumps, central air conditioners, furnaces, boilers and some panel upgrades, with annual limits.
• The Residential Clean Energy Credit (section 25D): 30 % of the cost of geothermal heat pumps and other clean energy property, with no annual limit.

Public Law 119-21, signed July 4, 2025, ended both. The IRS says 25C is not allowed for property placed in service after December 31, 2025, and 25D is not available when installation is completed after that date — even if you paid in 2025. Equipment installed in 2026 or later therefore gets no federal income tax credit.

If you installed in 2023, 2024 or 2025

You may still be able to claim the credit for the year the equipment was placed in service, on that year’s return with IRS Form 5695. The checker applies the rules the IRS publishes:

• The equipment must meet the Consortium for Energy Efficiency (CEE) highest tier, not including any advanced tier, in effect on January 1 of the installation year. The installer or manufacturer can confirm this.
• For 2025, the manufacturer must be a qualified manufacturer, and you report its QM code (or PIN) — for a heat pump, the outdoor unit’s.
• Heat pumps share a $2,000 annual limit; central air conditioners, furnaces, boilers and panels are limited to $600 each within a $1,200 annual limit shared with windows, doors, insulation and energy audits.
• Utility subsidies and seller or manufacturer rebates reduce the cost you can claim.

The result says “Likely eligible”, “Not eligible” or “Not enough information”. It cannot see your tax liability or check a product’s certification, so it is not tax advice.

State, utility and local incentives

Many utilities, states and cities offer rebates for heat pumps and efficient equipment, and the federal Home Energy Rebates (HOMES and HEEHR) are available in select states through state energy offices. These programs change often and depend on your address, income and utility, so we do not show amounts we cannot verify.

Good places to check: your electric and gas utility’s rebate page, your state energy office, the ENERGY STAR Rebate Finder, and the DSIRE database of state incentives.

Worked example

These are the example values the calculator opens with, and the result the engine calculates for them.

Air-source heat pump (ducted or ductless), 2026 or later: no federal tax credit applies.

Assumptions

• Rules are those published by the IRS and ENERGY STAR for each installation year, last checked on the date shown. Credit years follow the date the equipment was placed in service.
• Costs include installation labour where the IRS allows it (heat pumps, central air conditioners, furnaces, boilers, panel upgrades and 25D property).
• Limits are applied per taxpayer and tax year as entered; other credits you claim that year must be entered to apply the shared limits.

Limitations

• Not tax or legal advice. The checker cannot see your tax liability, filing status or other credits, and cannot confirm that a product meets the CEE tier or holds a QM code.
• State, utility and local incentives change often and differ by address; they are not verified here. The links point to official sources.
• Installations before 2022 (25D) or 2023 (25C) followed different rules and are not calculated.

Frequently asked questions

Sources

1. Energy Efficient Home Improvement Credit — Internal Revenue Service. 30 % of qualified costs for property placed in service 2023–2025; $1,200 annual limit, $600 per item for central air conditioners, furnaces and boilers, $2,000 for heat pumps; CEE highest non-advanced tier; existing home; QMID required in 2025; utility subsidies reduce qualified cost.
2. FAQs for modification of sections 25C, 25D … under Public Law 119-21 (July 4, 2025) — Internal Revenue Service. 25C is not allowed for property placed in service after December 31, 2025; 25D expenditures are treated as made when installation is completed, so installations completed after that date do not qualify even if paid earlier.
3. Residential Clean Energy Credit — Internal Revenue Service. 30 % for property installed 2022 through December 31, 2025; no annual or lifetime limit except fuel cells; new or existing homes; second homes not rented out; geothermal heat pumps must meet ENERGY STAR requirements at purchase; landlords excluded.
4. FS-2025-01: Updated FAQs on the 25C and 25D credits — Internal Revenue Service. Efficiency requirement is the CEE highest tier (not advanced) in effect at the beginning of the year placed in service; labour for onsite preparation, assembly or original installation of energy property counts; QM PIN rules (outdoor unit for split heat pumps).
5. Federal Tax Credits for Energy Efficiency — ENERGY STAR (U.S. EPA). Credits available through the end of 2025; for 2025 installations the four-digit QM code is sufficient; heating and cooling equipment can be claimed for a second home and by renters who make eligible improvements; air-source heat pumps recognised as ENERGY STAR Most Efficient are eligible from January 1, 2025.
6. Home Energy Rebates Program — U.S. Department of Energy. HOMES and HEEHR rebates are available only in select states; DOE directs households to their State or Territory Energy Office for status and eligibility (page modified 2026-07-08).
7. Database of State Incentives for Renewables & Efficiency (DSIRE) — NC Clean Energy Technology Center, NC State University (linked by DOE). Searchable directory of state, utility and local incentives; linked, not copied (its data is not reused here).

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