What HVAC System Qualifies For Tax Credit 2023

What HVAC system qualifies for tax credit 2023? Well, you should know that only ENERGY STAR-certified units are eligible at the moment for the tax credit.

What HVAC System Qualifies For Tax Credit 2023

And even at that, not all ENERGY STAR units get to qualify. The only exception here is for packaged air conditioners as just about any ENERGY STAR unit will get to qualify.

What HVAC System Qualifies For Tax Credit 2023

This is a great time to start thinking about upgrading your HVAC system as all thanks to the federal government you just may be eligible for both a tax credit as well as a rebate on your new HVAC unit. The new tax credits in question are part of the Inflation Reduction Act of 2022. And while this act was primarily designed to lessen the impact of said inflation, it also included provisions that are meant to help fight climate change.

One of these provisions to this new act is that new high-efficiency electric heat pumps, as well as some air conditioners, gas furnaces, and even other HVAC units, automatically qualify for a credit that you can easily apply against your taxes for next year, and this credit in question can help you to save quite a bit of money on your new unit. Here is everything you need to know about these new tax credits and also other rebates you may be eligible for.

What You Need To Know About the New Tax Credits and Pother Rebate You May Be Eligible For

The Inflation Reduction Act as you should know included a renewal and update for the previous Nonbusiness Energy Tax Credit. Dubbed as the Energy Efficient Home Improvement Tax Credit, this very program lets you to earn a tax credit of up to $3,200 every year. The program kicked off on January 1, 2023, and will reportedly run until December 31, 2032, which simply means that you may just be eligible if you upgrade or replace any of your HVAC units within the next decade.

Homeowners on the other hand can qualify for a tax credit worth up to $1,200 a year for installing high-efficiency air conditioners or even furnaces and also for making certain other types of upgrades to improve the energy efficiency of their homes, such as adding insulation or even replacing windows and doors. The total amount that you can claim in a year is $1,200, but there are some limitations, however. For example, the total tax credit cannot exceed over 30% of the total cost of your new HVAC units or any other types of upgrades that you make. New high-efficiency furnaces, as well as air conditioners, are also capped at 30% or up to $600.

You should know that there is also a separate tax credit for just about anyone who installs any new electric heat pump, biomass boiler, or heat pump water heater. And while this is also capped at 30% of the cost of buying and installing your new unit, you can also potentially claim a total tax credit of up to $2,000 for these units in question.


One very important thing to note here is that not all new units will get to qualify as there are certain restrictions on which heat pumps, furnaces, as well as central air conditioners qualify for these tax credits. Only ENERGY STAR-certified units just as mentioned earlier are eligible for the tax credit, and even then, not all ENERGY STAR units even get to qualify. The only exception here that you should know is for packaged air conditioners as any ENERGY STAR unit will qualify.



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