2024 HVAC Federal Tax Credit – Which Systems Are Eligible?

Josh Mitchell

Written By

Josh Mitchell

Expert Reviewed By

Holly Curell

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An energy-efficient HVAC system will not only keep you comfortable while lowering your energy bills, but can also save you big bucks in taxes.

The Energy Efficient Home Improvement Credit rewards you with tax credits if you install a qualifying energy-efficient air conditioner, heat pump, or other HVAC system.

Despite this awesome initiative, the rules and processes to get the credit can be confusing for homeowners.

I'll explain how the HVAC tax credit program works, what HVAC systems qualify, and how to claim the credit.

Let’s get your tax break!

Key Takeaways

  • You can receive up to $3,200 in federal tax credits for installing qualifying HVAC equipment into an existing home, split between ACs, furnaces, or boilers ($1,200) and air source heat pumps and biomass stoves ($2,000).
  • Your HVAC system must fulfill high energy efficiency requirements to qualify for tax credits.
  • There's no lifetime limit on the credits, allowing you to claim the credit until 2032 by carefully planning out your HVAC upgrades.

What Is the Energy Efficient Home Improvement Credit?

The Energy Efficient Home Improvement Credit (EEHIC) was introduced under the Inflation Reduction Act (IRA) of 2022.

It rewards you with tax breaks for installing qualifying energy-efficient HVAC solutions in your home.

This new tax credit program will continue until 2032, so you won’t have to worry about missing out if you’re just hearing about it for the first time.[1]

It’s based on the previous Non-Business Energy Property Tax Credit, which expired in 2021 and was part of the nearly two-decade-old Energy Policy Act of 2005.

However, the EEHIC introduces significant changes — including a much more understandable program name.

The EEHIC dramatically increases the amount of tax credit available to you.

Under the Non-Business Energy Property Tax Credit, you could only claim a lifetime tax credit of $500, split across multiple different HVAC and other home improvements.

Considering the costs of most HVAC installations, that was not a lot.

Under the new EEHIC program, you can claim six times as much credit every single year. Now that sounds much better.

TL;DR: EEHIC is tax credit system that awards you for installing high energy-efficient HVAC systems. 

How Does It Work?

The steps to claim the federal Energy Efficient Home Improvement Credit are fairly straightforward. Here’s my breakdown of the basic process:

  1. 1
    Purchase a qualifying HVAC system.
  2. 2
    Install the system into your home (labor costs qualify for tax credit).
  3. 3
    Fill out the IRS Form 5695 during tax preparation.
  4. 4
    Submit Form 5695 with your tax return, alongside relevant receipts and energy efficiency certificates.
  5. 5
    Wait to get your big tax break.

ACLAB Note:

We’re talking about taxes, though, so of course these steps are more complex than they seem initially. 

I’ll explain each step in detail later, so keep reading!

TL;DR: The most important step is that you have a qualifying HVAC system. Not all HVAC systems can be rewarded with tax credits.

How Much Will You Be Given?

In 2024, you can claim 30% of the costs for all qualifying HVAC systems installed during the year as tax credits.

The maximum tax credit amount you can get back is $3,200/year.

However, the $3,200 total credit is split as follows:

  • Up to $1,200 for central air conditioners, boilers, furnaces, and natural gas, oil, and propane water heaters (up to $600 per item).
  • Up to $2,000 for heat pump water heaters, biomass fuel stoves, and air source heat pumps.

Important Note:

Unlike in 2022 and earlier, there is no lifetime limit on the EEHIC, so you can claim the maximum amount every year if you’ve made qualifying home improvements.

I’ll give you some expert tips on how to maximize your tax credit later on in the article.

TL;DR: While the max tax credit benefit is $3,200/year it is divide into multiple items.

Can I Still Apply for Pre-2024 Tax Credits?

If you installed a qualifying HVAC system in 2023 or earlier, you can still claim the old Non-Business Energy Property Tax Credit.

As I mentioned, though, this older credit is not as generous.

It has a lifetime limit of only $500 and very strict limits on how much certain product categories can earn you in tax incentives. For example, there are the limits for:

  • Water heaters, heat pumps, and AC systems ($300)
  • Furnaces and boilers ($150)
  • Circulating fans ($50)

To claim this credit, you must check that your equipment was eligible in the year you installed it and you also have to file the old version of the IRS Form 5695.

For the equipment eligibility information, I recommend starting your search on the manufacturer’s website.

In this article, I will focus on the currently available tax credits in 2024. I just want to let you know that it’s not too late to claim credits from previous years!

TL;DR: If your equipment was eligible for tax credit in the year you installed it, then its not too late.


Which HVAC Systems Are Eligible for Tax Credit in 2024?

what hvac systems are eligible for tax credit

The Energy Efficient Home Improvement Credit is designed to reward you for installing energy-efficient whole-house HVAC equipment.

As such, some heating and cooling systems aren't eligible for the tax benefits.

For example, window air conditioners and space heaters don't count as eligible equipment under the EEHIC program.

Below is my breakdown of the qualifying HVAC equipment types so you can quickly determine whether your home improvement project is eligible for tax credits.

Air Source Heat Pumps

Air source heat pumps heat your home by drawing in ambient heat from outdoor air and distributing it throughout your home instead of burning fuel like stoves or furnaces.

These devices are available as ducted and ductless versions (the latter are also called mini-splits), and both types of heat pumps are eligible for EEHIC.

For installing a qualifying energy-efficient heat pump, you can claim 30% of the purchase and installation costs as tax credits, up to a maximum of $2,000 annually.

Important Note:

To qualify for the credit, whichever kind of system you install must meet or exceed the highest energy efficiency tier defined by the CEE on January 1, 2024.

However, there are different specific requirements based on whether you live in the north or south of the country.

Read the next section on how to qualify for HVAC tax credits, where I explain the differences in detail.

TL;DR: Air Source Heat Pumps get 30% of purchase and installation costs, and $2000 annual credit.

Boilers

Boilers are sometimes confused with water heaters, but they serve a distinct purposeboilers heat water strictly for heating purposes, not for general use.

Gas (both natural gas and propane) and oil-powered hot water boilers can qualify for tax credits under EEHIC.

You can get back 30% of the purchase and installation costs, but the maximum dollar limit for boilers sits at $600.

You can combine this maximum amount with a central AC system or furnace for a maximum credit of $1,200.

Gas boilers are eligible for the energy tax credit as long as they are Energy Star-rated and satisfy certain fuel efficiency limits.

Oil boilers must have an Energy Star rating and manufacturer’s certification of being able to use fuel blends consisting of at least 20% biodiesel, renewable diesel, or second-generation biofuels.

TL;DR: Boilers get 30% of purchase and installation costs, and $600 annual credit.

Central Air Conditioners

Central air conditioners — you know them, you love them. Central ACs can be eligible for EEHIC credits, whether they’re packaged or split systems.

Whichever cooling system you’ve installed, you can claim 30% of the project costs in tax credits, up to $600.

As I mentioned earlier, you can combine your central AC credits with a boiler or furnace system to get back a maximum of $1,200.

All packaged central AC systems qualify for EEHIC as long as they are Energy Star-certified.

Split central ACs have stricter requirements, as they must be Energy Star certified and meet or exceed a certain efficiency rating (more on that later).

TL;DR: Central ACs get 30% of purchase and installation costs, and $600 annual credit.

Furnaces

Like boilers, furnaces powered by natural gas, propane, and oil can earn you money back on taxes.

As you’re likely aware, these devices burn their specific fuel to generate heat that they then deliver to your home through HVAC ductwork.

Regardless of their fuel, EEHIC puts furnaces in the same category as boilers and central ACs.

As such, you can claim 30% of the device and installation in energy tax credits, up to an annual maximum of $600.

The eligibility criteria for furnace heating systems are similar to those for boilers.

Gas furnaces must be Energy Star-certified packaged systems and fulfill the set fuel efficiency requirements.

In contrast, oil furnaces must have an Energy Star label and be capable of burning 20% sustainable diesel or biofuel.

TL;DR: Furnaces get 30% of purchase and installation costs, and $600 annual credit.

Biomass Stoves & Boilers

Stoves, furnaces, and boilers that burn biomass fuel to heat water or your home can qualify for the federal tax credit.

For EEHIC, the DOE defines “biomass” as agricultural crops and trees, wood, wood waste and residues (such as pellets), plants, grasses, residues, and fibers.[2]

In order to qualify, the biomass furnace or boiler must have a manufacturer’s thermal energy rating of at least 75%.

Satisfying this requirement allows you to claim the good old 30% of project costs up to $2,000 (combined with heat pumps).

TL;DR: Biomass Stoves and Boilers get 30% of purchase and installation costs, and $2000 annual credit.

Geothermal Heat Pumps

The last, but not least, HVAC systems that can earn you tax credits are geothermal heat pumps.

Like air source heat pumps, these units transfer heat into your home, but instead of drawing it from the air, they rely on an underground natural heat source.

Geothermal heat pumps do not qualify for EEHIC but can be eligible for the Residential Clean Energy Credit (RCEC).

This credit was also established in the IRA 2022, claiming it works the same as EEHIC — it merely applies to different systems.[3]

With geothermal heat pumps, you can claim 30% of the project costs in tax credits with no annual or lifetime limits. They also don't count towards EEHIC limits.

That's excellent news because geothermal heat pumps can be hugely expensive, sometimes costing more than $30,000.

To qualify for RCEC, your geothermal heat pump must be Energy Star-certified and use a ground or groundwater thermal heat source or heat sink for heating and cooling.

TL;DR: Geothermal Heat Pumps get 30% of purchase and installation costs, and there is no limit annual limit.


How to Qualify for HVAC Tax Rebates

How to quality for tax rebates

To qualify for energy tax credits, you must have approved energy-efficient systems installed into a qualifying existing home.

Although you now know which types of HVAC equipment are eligible for a tax break, not every device in those categories qualifies.

Additionally, there are some conditions on your home, too, that you must fulfill to get your tax dollars back.

Here’s my detailed breakdown of every qualification requirement for HVAC tax credits.

1. Energy Efficiency Requirements

As I mentioned in the previous section, different HVAC systems must satisfy various energy efficiency requirements and ratings to be eligible for EEHIC.

I’ve listed the current requirements in the below table to make them easy to compare.

System Type

Certification

EER2

SEER2

HSPF

AFUE

Tax Credit

Air Source Heat Pump (Ducted, South)

Energy Star

-

-

-

-

Up to $2,000

Air Source Heat Pump (Ducted, North)

Energy Star Cold Climate

>10

-

-

-

Up to $2,000

Air Source Heat Pump (Ductless, South)

Energy Star

>12

>16

>9

-

Up to $2,000

Air Source Heat Pump (Ductless, North)

Energy Star Cold Climate

>9

>16

>9.5

-

Up to $2,000

Boiler (Gas)

Energy Star

-

-

-

>95%

Up to $600

Boiler (Oil)

Energy Star; must be rated for at least 20% renewable diesel, biodiesel, or 2nd-gen biofuel

-

-

-

-

Up to $600

Central AC (Packaged)

Energy Star

-

-

-

-

Up to $600

Central AC (Split)

Energy Star

-

>16

-

-

Up to $600

Furnace (Gas)

Energy Star

-

-

-

>97%

Up to $600

Furnace (Oil)

Energy Star; must be rated for at least 20% renewable diesel, biodiesel, or 2nd-gen biofuel

-

-

-

-

Up to $600

Biomass Stoves and Boilers

Thermal efficiency rating of >75%

-

-

-

-

Up to $2,000

Geothermal heat pumps

Energy Star

-

-

-

-

30% of costs, no upper limit

Ratings with a dash do not apply to that particular HVAC system.

Note that the actual text of the IRS rules requires eligible HVAC equipment to “meet or exceed the highest efficiency tier established by the CEE which is in effect as of the beginning of the calendar year.”

As I'm writing this, the above energy efficiency standards are in effect.

Still, I recommend checking the IRS and CEE websites regularly for the latest updates.

TL;DR: Depending upon the HVAC device, the energy efficiency requirement differs. Be sure to check out IRS to get the most up to date requirements. 

How to Figure Out the EER, SEER, HSPF and AFUE Ratings?

HVAC equipment may need a certain energy efficiency ratio (EER), seasonal energy efficiency ratio (SEER), heating seasonal performance factor (HSPF), and annualized fuel utilization efficiency (AFUE) rating to qualify for tax credits.

You don’t need to panic over the litany of strange acronyms.

All of this information should be in the owner’s manual and other documentation supplied with your heating or cooling equipment.

Another easy way to check your HVAC unit’s eligibility for tax credits is to visit the AHRI Directory.

Simply enter your unit's model number into the system and choose its entry, and you will see all of its ratings.

Finally, you may also be able to figure out the ratings by calling your HVAC contractor who installed the system.

In some cases, they can also give you the manufacturer’s certification statement.

TL;DR: Check the spec sheet or visit the AHRI directory to find the energy efficiency ratings of your HVAC system.

2. Residence Requirements

In addition to the HVAC equipment itself, the house you’re installing them in will determine whether you can claim EEHIC credits.

To qualify for the tax credits, the house must satisfy each of these requirements:

  • The home must be your primary residence
  • The home must be an existing home
  • The home must be located in the US.

The IRS defines a primary residence as the home where you live for the majority of the year.

This means you can’t claim EEHIC for HVAC systems installed, for example, in houses you rent out as a landlord.

However, you can still claim EEHIC for HVAC installations if you’re the tenant of a rented property (you should get the landlord’s permission for such projects, of course).[4]

You can only claim the EEHIC for HVAC installations or upgrades to existing homes. New builds are not eligible to receive the tax credit.

ACLAB Note:

This rule doesn’t apply to the RCEC given to geothermal heat pumps — you can claim tax credits for geothermal heat pumps even in newly constructed homes.

Finally, EEHIC and RCEC are tax credits handed out by the US federal government, so the home must be located in the United States.

I’m sorry, but you can’t get a tax break for installing a new AC at your French seaside vacation home.

TL;DR: The home must be your primary existing residence in US to quality for tax credits.

3. Other Requirements

There are also two smaller but still crucial details to keep in mind:

  • Any HVAC upgrades must be expected to remain in use for at least the next five years to qualify.
  • You can’t claim credit only for equipment purchases — you must install the equipment during the year you’re claiming the credit for.

TL;DR: Any upgrade or newly purchased component must be installed and in use and it should stay in use for at least the next five years.


How to Claim Your HVAC Energy Credit

To claim the EEHIC (and RCEC) federal HVAC tax credits, you need three things:

  1. 1
    A filled-out IRS Form 5695
  2. 2
    Any receipts for equipment purchases and installation costs
  3. 3
    The HVAC system manufacturer’s energy efficiency certificates

IRS Form 5695

The IRS Form 5695 is the main document for claiming federal energy tax credits. You can find it on the IRS website.

The IRS provides instructions for the form, but it is fortunately very straightforward to fill out even on your own.

Of course, if you hire someone to do your taxes, you can get them to take care of Form 5695!

TL;DR: IRS Form 5695 is the main document for availing federal tax credits on HVAC systems.

Send in the Receipts

You also have to send in receipts for all costs you’re claiming as tax credits, including equipment purchase costs and installation fees.

However, never send original documents to the IRS unless specifically asked for.

Important Reminder:

Try not to loose any of the receipts. Even if they are not required upfront, they may be required if ever you are audited.

Make a digital or photocopy of your receipts so you can hold onto the original in case there are any issues (I recommend making digital copies of your receipts anyway so they won't become illegible over time).

TL;DR: Send copies for your receipts.

Energy Efficiency Certificates Submission

Finally, you must send in any energy efficiency certificates that came with your HVAC equipment.

These certificates prove that your devices satisfy the tax credit’s energy efficiency requirements.

This is why I always recommend holding on to every single piece of paper that comes with your purchase.

There is an additional rule that kicks in after December 31, 2024.

If you claim energy tax credits in 2025, you must also submit to the IRS the manufacturer's product identification numbers for any HVAC devices you're basing your claim on.

This may be a serial number, a part number, or other such identifying code — the IRS will likely publish more detailed instructions towards the end of 2024.[5]

TL;DR: Hold on to any energy efficiency certificates that come with the equipment. These will be required to claim credit.

How to Fill Out IRS Form 5695

As I said, IRS Form 5695 is easy to fill out as far as tax documents go. Here’s my quick walkthrough of how to fill the form out to claim your EEHIC credits:

  1. 1
    Start with Part II, section 17, and tick the “Yes” box on lines 17 a-c. If you answer “No” to any of these lines, you are not eligible for the tax credit.
  2. 2
    Write your home’s address on line 17 d.
  3. 3
    Tick the “No” box on line 17 e (assuming you install your HVAC equipment in an existing home).
  4. 4
    In sections 18-20, you can claim the costs of any insulation, doors, and windows you installed. We’ll skip these for now.
  5. 5
    In section 21, tick the “Yes” box on lines 21 a-b and write your home’s address on line 21 c.
  6. 6
     In section 22, write down the costs of any installed AC systems. On line 22 a, write the full cost of the AC system and then calculate 30% of the cost for line 22 b. If the amount exceeds $600, write down $600 for line 22 b.
  7. 7
    Repeat this calculation for water heaters in section 23 and furnaces and boilers in section 24.
  8. 8
    In section 25, you can claim the costs of qualifying new HVAC electronics you may have installed.
  9. 9
    In section 26, you can claim the costs of any home energy audits you may have carried out.
  10. 10
    In sections 27-28, write down the total costs as instructed on the form.
  11. 11
    On lines 29 a-e, write down the costs of any heat pumps and biomass stoves you installed and calculate 30% of the total cost. If that amount is more than $2,000, write $2,000 on line 29 e.
  12. 12
    In sections 30-32 calculate your final tax credit amount as instructed on the form.

Important Note:

Note that you will have to fill out Part I if you’re claiming RCEC for a geothermal heat pump. That section works very similarly to Part II of the form, so just follow the instructions on the sheet.


American Brands That Qualify for Federal Tax Credit

Most major HVAC brands offer equipment that can qualify for federal tax credits.

However, claiming the credits is often cheaper if you choose an American manufacturer — they know the current laws and can give you an up-to-date manufacturer’s certification statement that helps you claim your credits.

It would be impossible for me to list every last manufacturer and HVAC unit, but below is my breakdown of the most popular American brands and examples of their qualifying models.

Note that the manufacturers’ product catalogs change constantly, so check their websites for the latest information.

Brand

Qualifying Models

Certification Statement

Amana

  • AC Systems: ASXC7, AXSH5, ASXV9 Series
  • Gas Furnaces: ACVM9 Series
  • Heat Pumps (Ducted): ASZC7, ASZH4, ASZH5, ASZN4 Series

American Standard

  • AC Systems: Gold 16, Silver 15
  • Furnaces: Gold S9V2-VS

Online (2023 certificates not yet available)

Ameristar

  • AC Systems: A4AC5
  • Gas Furnaces: A801X

Online (2023 certificates not yet available)

Bryant

See the Bryant website for a list of eligible models

Supplied by dealer or installer

Carrier

  • AC Systems: Infinity 26, 19VS; Performance 17, 16; Comfort 15
  • Gas Furnaces: Infinity 98, Performance 96, Comfort 96
  • Oil Furnaces: Performance 80, Comfort 80
  • Heat Pumps: Infinity 24, 18VS; Performance 17, 18
  • Geothermal Heat Pumps: Infinity, Performance, Comfort Series

Supplied by dealer or installer

Coleman

  • AC Systems: PCE6, AC21, AC 19
  • Gas Furnaces: CP9C
  • Heat Pumps: HC19, PHE6

Supplied by dealer or installer

Goodman

  • AC Systems: GSXC7, GSXH5, GSXV9 Series
  • Gas Furnaces: GCVM9 Series
  • Heat Pumps (Ducted): GSZB4, GSZC7, GSZH5 Series

Lennox

  • AC Systems: Certain Elite, Merit, and Signature Series models
  • Furnaces and Boilers: Certain Signature, Elite Series models
  • Mini Splits: MLB, MPC, MCB, MHB Series models

Rheem

  • AC Systems: RA18, RA14, WA14, RA13, WA13, RAC, RGE Series
  • Gas Furnaces: R98MV, R97MV
  • Heat Pumps: Several qualifying series and models

Supplied by dealer or installer. Visit the Rheem website for updated information.

Ruud

114 eligible models across multiple categories

Supplied by dealer or installer. Visit the Ruud website for updated information.

Trane

  • AC Systems: XV18, XV20i, XL17i, XR16,
  • Gas Furnaces: XC95m, S9V2-VS,

Online (2023 certificates not yet available)

York

  • AC Systems: YC2F, YC2E, YXT 19, YXT 21
  • Gas Furnaces: YP9C
  • Heat Pumps: YH2F, YZV 20, YZT 19, PCG6

Supplied by dealer or installer


How to Maximize Your HVAC Tax Credit

I strongly recommend planning your tax credit claim carefully so you don’t miss out on getting back as much money on your taxes as possible.

Here are my best tips on how to get the most credit for your HVAC installations.

  1. 1
    Space Out Your HVAC Upgrades:
    The current EEHIC rules cap your credits annually, but they have no lifetime limits.

    As such, I recommend carrying out your HVAC upgrades over 2-3 years so you can claim the maximum $3,200 multiple years in a row.
  2. 2
    Remember The Equipment Categories:
    The maximum annual credit is different for central ACs, furnaces, and boilers ($1,200) and air source heat pumps and biomass stoves ($2,000).

    Depending on their costs, it may be best to avoid installing — for example — a central AC and a new furnace during the same year to prevent one system from eating up the credit.
  3. 3
    Don’t Forget Non-HVAC Improvements:
    You can also claim EEHIC for other home improvements besides HVAC systems, including qualifying doors, windows, and insulation.

    Keep them in mind, as upgrading these parts of your home can help you pad out your maximum credit claims. Tighter sealing and insulation also make your HVAC systems more efficient, so you’ll save even more money in the long run

People Also Ask (FAQs)

What is the Maximum Tax Credit I Can Receive for My HVAC Systems?

The maximum tax credit amount you can receive for HVAC installations is $3,200.

This is split into two categories: $1,200 for AC systems, boilers, and furnaces, and $2,000 for air source heat pumps and biomass stoves.

Are There State or Local Tax Credits Available for HVAC Systems?

Yes, many US states have local utility rebates and tax credit programs for HVAC installations.

You can ask your local state administration about the programs they can offer you.

Does a New HVAC System Qualify for Tax Credits?

Yes, a new HVAC system can qualify for a federal energy efficiency tax credit as long as it’s installed into an existing home. Newly built homes, however, do not qualify.

When Does the HVAC Tax Credit Program End?

The current federal HVAC tax credit program under IRA 2022 will end on December 31, 2032.

Some parts of the credits will remain available in annually diminishing amounts until the end of 2034.

Save Money on Taxes with the Best HVAC Systems

The federal EEHIC program lets you get money back on taxes while also allowing you to enjoy energy savings as you keep your home comfortable.

If you've installed or plan to install new energy-efficient HVAC systems, I wholeheartedly recommend applying for the tax break.

With my guide, you can now figure out what HVAC systems qualify for tax credit and make the best choice for your home and wallet.

References: 

  1. https://www.irs.gov/credits-deductions/energy-efficient-home-improvement-credit
  2. https://www.energystar.gov/about/federal_tax_credits/biomass_stoves
  3. https://www.irs.gov/credits-deductions/residential-clean-energy-credit
  4. https://www.irs.gov/credits-deductions/frequently-asked-questions-about-energy-efficient-
  5. home-improvements-and-residential-clean-energy-property-credits-qualifying-residence
  6. https://uscode.house.gov/view.xhtml?req=(title:26%20section:25C%20edition:prelim) 
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Josh Mitchell

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Josh Mitchell
My name is Josh and I am obsessed with home appliances. From portable AC units to heaters and air purifiers, I enjoy testing, learning and using these devices to improve the air quality inside my family home.

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