HVAC systems that meet Department of Energy efficiency standards can reduce your federal income tax in 2024
The federal tax credit for HVAC equipment covers air conditioners, heat pumps, and furnaces that meet specific efficiency ratings set by the Department of Energy. The credit applies to equipment installed in your primary residence between January 1, 2024, and December 31, 2032. You claim it on your tax return for the year the system was installed, not the year you purchased it.
The credit amount depends on the type of system and its efficiency level. A heat pump can may have access to for up to $2,000; an air conditioner or furnace for up to $600 each. Some systems may have access to for multiple credits if they are part of a larger upgrade — for example, a heat pump that replaces both heating and cooling equipment may open different credit pathways than a standalone unit.
Not every HVAC system qualifies. The equipment must meet minimum efficiency thresholds, and your contractor must install it according to manufacturer specifications. The system must also be new, not used or refurbished.
Key Takeaways
- Heat pumps, air conditioners, and furnaces may have access to only if they meet Department of Energy efficiency ratings, which vary by climate zone and equipment type.
- The credit applies to equipment installed in 2024 through 2032 in your primary home, and you claim it on your tax return for the installation year.
- Your contractor must certify that the system meets efficiency standards and was installed correctly; you will need this documentation when you file.
- A single installation can sometimes trigger multiple credits — for instance, a heat pump that provides both heating and cooling may may have access to under different credit categories.
- The credit is nonrefundable, meaning it reduces your tax bill but cannot result in a refund if your tax liability is lower than the credit amount.
Heat pumps and the highest credit amount
Air-source heat pumps that meet Department of Energy standards can reduce your tax bill by up to $2,000 in 2024. The system must have a Heating Seasonal Performance Factor (HSPF2) of at least 8.5 and a Seasonal Energy Efficiency Ratio (SEER2) of at least 16. These ratings measure how efficiently the unit heats and cools your home across a full season.
Ground-source (geothermal) heat pumps also may have access to for up to $2,000 if they meet their own efficiency thresholds. Geothermal systems are more expensive to install but often achieve higher efficiency ratings, which can make them more likely to cross the qualification threshold.
If you install a heat pump as part of a larger project — such as replacing an old furnace and air conditioner at the same time — you may be able to claim credits for multiple components. Your contractor and tax preparer will need to document which equipment qualifies under which credit category.
Air conditioners and furnaces under $600 each
Central air conditioners may have access to for up to $600 if they have a SEER2 rating of at least 16. This is the same cooling efficiency standard that applies to heat pumps. The system must be installed in your primary residence and must be new equipment.
Furnaces may have access to for up to $600 if they have an Annual Fuel Utilization Efficiency (AFUE) rating of at least 95 percent. This rating measures how much of the fuel burned actually heats your home versus escaping as waste. Most modern furnaces meet or exceed this threshold, but older units do not.
You cannot claim both an air conditioner credit and a heat pump credit for the same cooling function in the same year. If you install a heat pump that provides both heating and cooling, you claim the heat pump credit, not separate credits for cooling and heating.
How to verify your system meets the standards
Your HVAC contractor should provide documentation showing the equipment model number and its efficiency ratings before installation. Ask for the SEER2, HSPF2, or AFUE rating in writing — this is the document you will need when you file your tax return.
You can also look up equipment ratings on the Department of Energy's AHRI (Air-Conditioning, Heating, and Refrigeration Institute) database or the manufacturer's specification sheet. Search by model number to confirm the exact ratings for the unit your contractor proposes to install.
After installation, your contractor should provide a certification statement confirming that the system was installed according to manufacturer specifications and meets the efficiency requirements. This certification is separate from the equipment rating and proves the installation was done correctly. Keep both documents with your tax records.
Installation requirements and contractor certification
The equipment must be installed in your primary residence — the home where you live most of the year. Second homes, rental properties, and investment properties do not may have access to for this credit.
Installation must follow the manufacturer's instructions and local building codes. Your contractor should be licensed and insured. Some states and utilities offer their own rebates for HVAC upgrades, and these do not reduce your federal tax credit — you can claim both.
The contractor must provide written certification that the system meets the efficiency standards and was installed correctly. Without this documentation, you cannot claim the credit on your tax return, even if the equipment itself qualifies. Ask for this certification before the contractor leaves your home.
How the credit works on your tax return
The HVAC credit is a nonrefundable tax credit, which means it reduces the amount of federal income tax you owe. If your tax bill for 2024 is $3,000 and you have a $2,000 heat pump credit, your tax bill becomes $1,000. You pay $1,000 to the IRS.
If your tax bill is lower than the credit amount, the credit cannot create a refund. For example, if your tax bill is $1,200 and your credit is $2,000, the credit reduces your bill to zero, but you do not receive the extra $800. However, you can carry unused credits forward to future tax years in some cases — check with a tax preparer about your specific situation.
You report the credit on IRS Form 5695 (Residential Energy Credits) and attach it to your Form 1040 when you file. If you use tax preparation software, it will guide you through entering the equipment information and certification details.
Systems that do not may have access to
Used or refurbished HVAC equipment does not may have access to, even if it meets efficiency standards. The system must be new and purchased for installation in 2024 or later.
Equipment installed before January 1, 2024, or after December 31, 2032, does not may have access to for the 2024 credit, though other credits may be available in different years. Check the year of installation carefully — the credit applies to the year the system was physically installed in your home, not the year you signed the contract or paid the invoice.
Systems installed in secondary residences, rental properties, or commercial buildings do not may have access to. The credit is limited to primary residences only.
Equipment that does not meet the Department of Energy efficiency thresholds does not may have access to, regardless of when it was installed or where. A furnace with an AFUE below 95 percent, an air conditioner with a SEER2 below 16, or a heat pump with ratings below the specified thresholds will not reduce your tax bill under this credit.
Frequently Asked Questions
Can I claim the credit if I installed my HVAC system in late 2023?
No. The credit applies only to systems installed on or after January 1, 2024. If your system was installed in 2023, you may have been able to claim a different federal energy credit for that year. Check your 2023 tax return or speak with a tax preparer about what credits applied to your 2023 installation.
What if my contractor cannot provide the efficiency certification?
You cannot claim the credit without written certification from your contractor that the system meets the efficiency standards and was installed correctly. If your contractor cannot or will not provide this, contact the manufacturer directly — they can sometimes provide documentation of the equipment's ratings, though this is not a substitute for the installer's certification.
Do I need to report the credit if my tax bill is zero?
Yes. You must file a tax return and report the credit on Form 5695, even if your tax liability is zero. This creates an official record of the credit and may allow you to carry unused portions forward to future years, depending on your circumstances.
Can I claim credits for both a heat pump and a separate air conditioner?
No. If a heat pump provides both heating and cooling, you claim the heat pump credit only. You cannot claim separate credits for the cooling and heating functions of the same unit. If you install a heat pump for heating and a separate air conditioner for cooling, speak with a tax preparer about how to report both.
Does the credit explore if I financed the system through a loan?
Yes. The credit applies based on the year of installation, not how you paid for it. Whether you paid cash, financed the system, or used a home equity line of credit does not change your may be able to access for the credit.