Tax Credits
Maximizing Savings with Energy-Efficient HVAC Systems
Homeowners across the U.S. can take advantage of valuable federal, state, and local tax credits or rebates when they invest in energy-efficient HVAC systems, such as mini splits, heat pumps, or air conditioners. These financial incentives are designed to encourage the adoption of environmentally friendly technologies, which help reduce energy consumption and lower utility bills.
By installing systems that meet ENERGY STAR® standards or other qualifying criteria, homeowners may be eligible to receive rebates at both the state and local levels, and even claim federal tax credits. These programs not only ease the initial cost of purchasing energy-efficient units but also contribute to long-term energy savings and environmental benefits.
Eligibility: Your air conditioning must meet or exceed the Energy Star requirements for efficiency. This usually involves specific Seasonal Energy Efficiency Rating Ratio( SEER) and Heating Seasonal Performance Factor(HSPF) ratings.
Federal Tax Credits
The U.S. federal government offers valuable tax credits to encourage the purchase of energy-efficient home improvements under the Inflation Reduction Act (IRA) and other federal programs. These tax incentives help homeowners save on the installation of qualifying HVAC systems, such as mini splits and heat pumps, while also promoting environmental sustainability.
Currently, homeowners can receive tax credits of up to 30% of the total cost (including installation) for qualifying energy-efficient air conditioners and heat pumps, with maximum credit amounts varying based on the type of system installed. These credits can be claimed as part of the Federal Energy Efficient Home Improvement Credit.
Incentives under the IRA are set to continue through 2032, giving homeowners ample time to take advantage of these significant savings. This makes it a great opportunity to upgrade to more energy-efficient systems while enjoying reduced energy bills and contributing to a greener environment.
For more information on these tax credits: https://www.energystar.gov/about/federal-tax-credits
What is ENERGY STAR®?
ENERGY STAR® is a government-backed symbol for energy efficiency, providing simple, credible, and unbiased information that consumers rely on to make well-informed decisions. Products that earn the ENERGY STAR® label are independently certified to meet strict standards for energy efficiency set by the U.S. Environmental Protection Agency (EPA).
Why ENERGY STAR® Certification Matters:
Energy Efficiency: Products with the ENERGY STAR® label use significantly less energy than standard models, helping homeowners reduce their electricity consumption and lower utility bills.
Environmental Impact: By using less energy, ENERGY STAR® certified products help reduce greenhouse gas emissions, contributing to a cleaner and healthier environment.
Financial Savings: ENERGY STAR® certified air conditioners and HVAC systems may qualify for federal tax credits and state rebates, making them a cost-effective choice for both initial purchase and long-term savings on energy bills.
Qualifying Products for Tax Credits:
All air conditioners and HVAC systems that qualify for federal tax credits or state rebates must meet or exceed the efficiency standards set by ENERGY STAR®. When choosing an air conditioning unit, look for the ENERGY STAR® label to ensure that it qualifies for these incentives.
You can explore ENERGY STAR® certified products available on our website, which meet the criteria for tax credits and rebates.
Please refer to the table below to find ENERGY STAR® certified mini split SKUs, or click here to view the document.
Northern Region Qualifying Mini Splits
Outdoor Model # | Indoor Model # |
---|---|
Southern Region Qualifying Mini Splits
Outdoor Model # | Indoor Model # |
---|---|
How ENERGY STAR® Helps You Save:
Lower Energy Bills: ENERGY STAR® certified air conditioners and HVAC systems are designed to use less energy without sacrificing performance. This means you can enjoy a comfortable home environment while saving up to 30% on your energy bills compared to non-certified models.
Tax Credits and Rebates: As part of the U.S. government's push for energy efficiency, many ENERGY STAR® products qualify for federal tax credits, state rebates, and other incentives. By choosing certified products, you may be able to offset the cost of your purchase and installation.
Long-Term Benefits: Investing in ENERGY STAR® certified products not only reduces your immediate utility bills but also helps lower your environmental footprint by reducing carbon emissions. Over time, the energy savings from these products can lead to significant cost reductions, making them a smart investment for any homeowner.
How to Claim Your Tax Credit for HVAC Purchases
If you’ve purchased an eligible energy-efficient HVAC system, such as a mini split or heat pump, you may be entitled to claim a federal tax credit. Follow the simple steps below to ensure you receive your credit.
Step-by-Step Guide:
1. Save Your Invoice
After purchasing your HVAC system, make sure to keep copies of all relevant receipts, including the product purchase and any installation costs. You will need these documents when filing your taxes.
2. Verify Product Eligibility
Confirm that your HVAC system qualifies for federal tax credits. Eligible systems must meet ENERGY STAR® efficiency standards and other specific criteria. You can find more information about qualifying products on our ENERGY STAR® certified products page.
3. Complete IRS Form 5695
To claim your tax credit, you’ll need to fill out IRS Form 5695: Residential Energy Credits. This form allows you to calculate the tax credit for any energy-efficient home improvements, including HVAC systems.
Download IRS Form 5695 directly from the IRS website.
Complete the form by entering the necessary information about your HVAC purchase, including the type of system and the cost.
- Claim the credits using the IRS Form 5695.
- Instructions for Form 5695
- Instructions for Form 5695 (Print Version - PDF)
4. File with Your Taxes
- Once you’ve completed Form 5695, include it with your federal tax return. You may either file the form electronically if using tax software or submit a physical copy if filing by mail.
- If you’re unsure about any part of the process, consider consulting a tax professional who can assist you with claiming your credit.
5. Important Dates
- Be sure to claim your tax credit in the same tax year as your HVAC purchase and installation. The IRS typically sets deadlines for filing taxes, usually by April 15 each year.
- Keep in mind that tax credits may expire or change due to updates in federal policies, so act promptly to take advantage of available incentives.
Important Information to Keep in Mind:
Maximum Credit Limits: For HVAC systems like mini splits, there may be a limit on the total amount of credit you can claim. Be sure to check current guidelines on maximum credit amounts.
Record Keeping: You should retain your documentation, including product certifications and receipts, for several years in case the IRS requests verification of your tax credit claim.
FAQ
Explore Energy-Efficient AC Solutions
As you learn about the benefits of tax credits, take a moment to explore our selection of ENERGY STAR® certified air conditioners. From ductless mini splits to heat pumps, our products are designed to maximize comfort while helping you save on energy bills and qualify for available tax incentives.
If you have any questions about which systems are eligible or need guidance finding the right fit for your home, our team is here to assist. Feel free to reach out anytime for personalized advice and support.