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tax credits for hvac

How Can I Get Tax Credits for HVAC? 

Home renovations and upgrades are never a simple task. It takes time to research contractors and get estimates. And don’t forget needing all the appropriate permits and inspections that come with each step. Then there are expected expenses, unexpected expenses that you put away extra money to take care of, and “double-surprise-extra” expenses that pop up along the way. In the end, the renovations will greatly improve your home, but what if you could get a little bit of a reward for all this hard work? You can- there are tax credits for HVAC available!

When it comes to replacing older heaters, AC units, and heat pumps, you may be able to claim a tax credit. Tax credits and rebates are established as an incentive to get home and business owners to invest in more energy-efficient technology. As you improve a building, these tax credits are there to help lift some of the cost. It’s pretty much a win-win scenario! You not only get increased air comfort and quality, but you save some money as well! 

SEE ALSO: 7 Signs Your Home Needs a New HVAC System


Energy Star

ENERGY STAR is a program created by the American government to encourage people to move towards the selection of more energy efficient appliances. Founded in 1992, the ENERGY STAR logo is a familiar part on the box of many devices that you’ve probably purchased since it first kicked off. ENERGY STAR emphasizes both efficient products that promote less pollution and less energy use as well as providing people with lower-cost options for improving their homes and workplaces.

As stated on the website, “ENERGY STAR and its partners have helped American families and businesses save 5 trillion kilowatt-hours of electricity, avoid more than $500 billion in energy costs, and achieve 4 billion metric tons of greenhouse gas reductions. Over the lifetime of the program, every dollar EPA has spent on ENERGY STAR resulted in nearly $350 in energy cost savings for American business and households. In 2020 alone, ENERGY STAR and its partners helped Americans save more than 520 billion kilowatt-hours of electricity and avoid $42 billion in energy costs.” ENERGY STAR is determined to make energy saving appliances work best for you.

SEE ALSO: What is an Energy Star Rating


Things to Know

When it comes to tax credits for installing or updating your home’s HVAC system in some way, it can quickly become confusing with all the information you need to process. Here are some key points of information for you to know and consider:

  • The offers given may come in the form of tax rebates or tax credits. Take a moment and check your finances to make sure the deal will work for you.
  • Tax credits have an expiration date! Make sure that you will be able to access the tax credit before the deadline passes.
  • To find active tax credits, you can check at, consult an accountant, or talk with your local, licensed HVAC service provider. 
  • Tax credits may or may not be applicable to second homes or vacation homes. 
  • If you missed a deadline, you may be able to amend a prior year’s taxes to take advantage of a tax credit.
  • Tax credits do not double for married couples. You would have to live in a separate residence from your spouse for that to happen.
  • Because the whole point of this is to bring more energy efficient appliances into use, whatever you are installing must actually be ENERGY STAR approved. Obviously water heaters, solar panels, and heat pumps will all have different qualifying performance aspects, so make sure that you are choosing the right make and model to get your tax credit. Communicating with your HVAC technician to let them know you want to qualify for a specific tax credit will help guide you to the right option for your home. 
  • The current wave of tax credits includes “renewable energy” items. The IRS considers things like solar powered water heaters, geothermal heat pumps, and small wind turbines intended for residential use as tax credits. 


Paperwork that Works for You

Let’s go ahead and say you’ve just installed an ENERGY STAR approved heat pump, bringing lower energy costs and higher quality air comfort into your home. When it comes time to sit down and ensure you’ve done everything right to get that tax credit, keeping track of paperwork is key. One piece of paper you will want to file away is the AHRI Certification that comes with your air conditioning unit. This certificate will have the relevant information about the new unit’s qualifying efficiency. You may also need it later when it’s time to file for the tax credit.

When it comes time to claim the tax credit, you will need to fill out the relevant IRS tax form. It’s hard to be specific about this as tax forms can change from year to year. However, if you are trying to seek this tax credit, it would be best to seek out the advice of a professional accountant. 


Do Your Research!

Available tax rebates and tax credits can change depending on federal, state, and local legislation. There can also be expiration dates on tax credits and rebates, so pay attention to the calendar when it comes to planning the installation of anything that might run up against the end of a rebate period. Many tax credits also decrease in value throughout their active period to incentivize early adaptors. Planning HVAC improvements to work with tax credits may not always be possible, but it is certainly worth the effort. Start with a search on the ENERGY STAR website to see what tax credits are available, and see if your stars are in alignment to help save some money. 

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