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Federal HVAC Tax Credits

The Inflation Reduction Act includes tax credits that reward homeowners for purchasing certain high-efficiency HVAC equipment. Heat pump tax credits in addition to tax credits for air conditioners and furnaces are available.

carrier high efficiency system that qualifies for heat pump tax credit and 25c tax credit
There’s Never Been a Better Time to Buy Our Highest Efficiency Systems.

Our highest-efficiency heating and cooling systems offer several homeowner benefits. From energy savings, to comfort-enhancing innovations like Greenspeed® intelligence, to longer component-specific warranties, there's a lot to like. And now there’s another potential benefit, thanks to Uncle Sam: the Inflation Reduction Act.


What is The Inflation Reduction Act?

To help reduce the effects of inflation, the U.S. Government has passed the Inflation Reduction Act of 2022. Of particular interest to homeowners, this act includes a number of tax credits for the installation of ENERGY STAR® certified home heating and cooling products. 

What is a Federal HVAC Tax Credit?

The Federal HVAC tax credit—officially part of the Energy Efficient Home Improvement Credit—allows eligible homeowners to claim up to $3,200 annually for qualifying HVAC upgrades made between 2023 and 2032. This energy tax credit helps offset the cost of installing approved energy efficient home improvement systems, such as high-efficiency heat pumps, furnaces, central air conditioners, and even home energy audits. To claim the tax credit, you must retain manufacturer documentation that certifies the product’s eligibility and complete IRS Form 5695, Residential Energy Credits. File the form with your federal tax return, and be sure to keep all receipts and certifications for your records. Federal HVAC tax credits include:

a carrier HVAC system that qualifies for tax credit 25c

Tax Section 25C, Tax Credit for Nonbusiness Energy Property

Effective Jan 1, 2023: Provides a tax credit to homeowners equal to 30% of installation costs for the highest efficiency tier products, up to a maximum of $600 for qualified air conditioners and furnaces, and a maximum of $2,000 for qualified heat pumps.
25C Tax Credit Product Offering Path SEER2 EER2 HSPF2 COP @ 5F Capacity Ratio (5F/47F) Other Requirements
Up to $2,000 Heat Pumps Split Ducted Heat Pump Path A ≥16.0 ≥9.8 ≥8.5 1.75 60% -
Path B ≥16.0 ≥11.0 ≥8.0 1.75 45% -
Packaged Heat Pump - ≥15.2 ≥10 ≥7.2 1.75 45% -
Up to $600 Air Conditioners Split AC - ≥17.0 ≥12 - - - -
Packaged AC - ≥16.0 ≥11.5 - - - -
Up to $600 Furnaces Gas-Fired Forced Hot Air - - - - - - ≥97% AFUE

Eligible models as listed above are qualified and dependent upon specific system combinations. To view certified combinations, visit CEE Directory | AHRI.


See tax credits for 2022 and previous years open_in_new

a carrier geothermal HVAC system that qualifies for tax credit 25d

Tax Section 25D, Residential Energy Efficient Property

Provides a tax credit to homeowners equal to 30% of installation costs for ENERGY STAR® geothermal heat pumps until 2032. That percentage drops to 26% in 2033 and 22% in 2034.

a home that qualifies for the High-Efficiency Electric Home Rebate Program

High-Efficiency Electric Home Rebate Program

Provides income-depending rebates to eligible homeowners including:

  • Up to $8,000 for all-electric Heat Pumps
  • Up to $4,000 for electrical load service center
  • Up to $2,500 for electric wiring
  • Up to $14,000 maximum for all

What HVAC Systems Qualify for Tax Credits in 2025?

Several Carrier HVAC systems—including gas furnaces, split system air conditioners, and heat pumps—qualify for federal tax credits under the Energy Efficient Home Improvement Credit in 2025. Eligible units must be ENERGY STAR® certified and meet specific efficiency criteria for installation in primary residences. Qualifying Carrier HVAC Systems include:

  • Gas Furnaces: Must be fueled by natural gas, propane, or oil, and have an AFUE rating of 97% or higher. Explore Carrier furnace tax credits.
  • Split System Air Conditioners: Must be ENERGY STAR certified and meet the highest tier efficiency requirements set by the Consortium for Energy Efficiency (CEE). These systems provide reliable central cooling for year-round comfort.
  • Air Source Heat Pumps: Require ≥ 15.2 SEER2, ≥ 7.8 HSPF2, and ≥ 11.7 EER2 to qualify. Must be ENERGY STAR certified and installed as part of a complete split system. Explore Carrier heat pump tax credits.
  • Ductless Mini Split Systems: Qualify when they meet the same ENERGY STAR efficiency standards as air source heat pumps. Great for zoning and homes without ductwork. Explore Carrier mini split tax credits.

Carrier’s ENERGY STAR certified solutions make it easier to upgrade your home's comfort systems while taking advantage of valuable 2025 energy tax credits.

a carrier dealer discusses with homeowners what hvac system qualifies for tax credit

Frequently Asked Questions About Federal HVAC Tax Credits

The 30% federal tax credit—part of the Energy Efficient Home Improvement Credit—covers 30% of the cost of eligible HVAC equipment, installation, and home energy audits, up to annual limits (e.g., up to $2,000 for heat pumps and $600 for furnaces or central air conditioners). The credit applies to qualifying improvements made between 2023 and 2032. To claim the credit, homeowners must file IRS Form 5695 with their federal tax return.
A federal tax credit directly reduces the amount of income tax you owe—so yes, it can result in getting money back, but only if it reduces your tax liability below what you’ve already paid. However, this credit is nonrefundable, meaning it can lower your tax bill to zero but won’t generate a refund beyond what you’ve paid in taxes. If your tax liability is low, you may not receive the full value of the credit.
Yes, you can write off a new AC unit on your taxes if it meets eligibility requirements under the Energy Efficient Home Improvement Credit. The credit covers 30% of the total project cost, up to $600, for qualifying ENERGY STAR® certified central air conditioners. To claim the credit, include IRS Form 5695 with your tax return and keep documentation proving the unit's eligibility.
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Carrier’s EcoHome program offers 0% same as cash financing available so you can make monthly payments on high efficiency equipment YOU want.1 Ask about bundling opportunities with factory rebates like Cool Cash, state and local government rebates, and the Inflation Reduction Act. Call your local Carrier Factory Authorized Dealer today!

couple researching federal tax credit and heat pump tax credit
Local Utility Rebates

In addition to federal tax credits for homeowners, local utility rebates may be available on some products to help reduce the overall expense of installing a new heating and cooling system. Search for local rebates in your area by clicking on the link below.

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