Energy Tax Credits
Federal Energy Tax Credits
WHAT DOES THIS MEAN FOR YOU?
Through the Inflation Reduction Act, you will have access to cost-saving options when purchasing energy-efficient and electric appliances or making home improvements to electrify your home or increase its energy efficiency through these programs.
ENERGY EFFICIENT HOME IMPROVEMENT TAX CREDIT (25C) PROGRAM
The previous Nonbusiness Energy Property credit (25C) for installing high-efficiency equipment was extended through 2032 and provides federal tax credits of up to $500.
The amended Energy Efficient Home Improvement Credit (25C) begins in 2023 and extends through 2032. It increases the tax credit limits for high-efficiency equipment as follows:
1) Eligible equipment includes:
- Heat pumps and heat pump water heaters
- Energy-efficient HVAC systems (including furnaces, boilers, and central AC)
2) The 25C credit has an annual cap of $1,200 (except heat pump):
- Up to $600 each for a qualified air conditioner or gas furnace, with an annual cap of $1,200
- Up to $2,000 with a qualified heat pump, heat pump water heater, or boiler
There are no income requirements for this tax credit, and it cannot be combined with other federal programs.
Incentives offered by
Federal Government
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Air-Source Heat Pump - Single Package 30% of cost up to $2,000
Federal Government offers tax credit on the purchase and installation of select air-source heat pump - single package. Offer valid 01/01/2023 through 12/31/2032. Other restrictions may apply; please visit the website for additional details.
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Air-Source Heat Pump - Split Systems 30% of cost up to $2,000
Federal Government offers tax credit on the purchase and installation of select air-source heat pump - single package. Offer valid 01/01/2023 through 12/31/2032. Other restrictions may apply; please visit the website for additional details.
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Ductless Heat Pump (mini & multi split) Systems 30% of cost up to $2,000
Federal Government offers tax credit on the purchase and installation of select air-source heat pump - single package. Offer valid 01/01/2023 through 12/31/2032. Other restrictions may apply; please visit the website for additional details.
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Geothermal Heat Pumps 30% of cost
Federal Government offers tax credit on the purchase and installation of select geothermal heat pumps. Offer valid 01/01/2023 through 12/31/2034. Other restrictions may apply; please visit the website for additional details.
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Heat Pump Water Heaters 30% of cost up to $2,000
Federal Government offers tax credit on the purchase and installation of select air-source heat pump - single package. Offer valid 01/01/2023 through 12/31/2032. Other restrictions may apply; please visit the website for additional details.
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Central Air Conditioning - Single Package 30% of cost up to $600
Federal Government offers tax credit on the purchase and installation of select air-source heat pump - single package. Offer valid 01/01/2023 through 12/31/2032. Other restrictions may apply; please visit the website for additional details.
WHO CAN USE THIS CREDIT?
PRINCIPAL RESIDENCE OWNERS
HIGH-EFFICIENCY ELECTRIC HOME REBATE PROGRAM (HEEHRP)
The U.S. government appropriated $4.5B of funds for the High-Efficiency Electric Home Rebate Program (HEEHRP) and will distribute the funds to state energy offices to administer the rebate program.
HEEHRP provides HVAC rebates up to $14,000 per household, including:
Up to $8,000 for installing Energy Star® qualified heat pumps
Up to $4,000 for electrical panel upgrades
Up to $1,600 for home insulation and sealing
Up to $2,500 for home electrical wiring improvements
Eligibility and the amount of the rebate depends on household income:
For households below 80% of area median income, 100% of the system purchase price qualifies for the rebate.
For households that fall within 80% to 150% of area median income, 50% of the system purchase price qualifies for the rebate.
Households above 150% of area median income do not qualify for the HEEHRP rebate.
