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HVAC Tax Credit 2025: What Homeowners Need to Know Before It Expires

HVAC Tax Credit 2025: What Central Kentucky Homeowners Need to Know Before It Expires

📑 Table of Contents

What Is the HVAC Tax Credit 2025?

The HVAC tax credit 2025 is a federal tax incentive available through the Energy Efficient Home Improvement Credit (Section 25C) — part of the Inflation Reduction Act.

It allows homeowners to receive up to $2,000 in tax credits for the purchase and installation of a qualifying energy-efficient heat pump system, as long as the system is installed by December 31, 2025.

This credit is designed to help U.S. homeowners offset the cost of upgrading to cleaner, high-efficiency HVAC systems, while reducing overall energy usage and emissions.

How Much Money Can You Save?

Under the updated rules for 2025, homeowners can claim 30% of the total installed cost of eligible heat pump systems, up to $2,000 per year.

Here’s a breakdown of potential savings:

System Cost30% Credit ValueTotal Federal Credit
$5,000$1,500✅ Eligible
$6,700$2,000✅ Max Credit Reached
$8,500$2,000✅ Max Credit Reached

💡 This is a nonrefundable tax credit — it reduces your tax bill but doesn’t give you a refund if you owe nothing.

Which HVAC Systems Qualify for the Tax Credit?

To receive the HVAC tax credit 2025, your new heat pump must meet minimum energy efficiency ratings set by the Consortium for Energy Efficiency (CEE).

✅ Qualifying Equipment:

  • Air-source heat pumps (CEE Tier 1 or Tier 2)
  • High-efficiency central ACs (CEE Tier 2)
  • Gas furnaces (AFUE ≥ 95%, up to $600 credit only)

Note: The full $2,000 credit is only available for heat pump systems.

At Lexington Electrical & HVAC, we install multiple eligible systems, including:

  • 15 SEER2 heat pumps (CEE Tier I)
  • 17 SEER2 multi-speed heat pumps (CEE Tier II)

These systems qualify for the maximum $2,000 tax credit, as well as utility rebates and promotional financing plans.

How to Claim the HVAC Tax Credit 2025

Claiming the credit is easier than many homeowners realize. Here’s what to do:

Step-by-Step:

  1. Get a quote and install a qualifying system
    Lexington Electrical & HVAC can help you choose an eligible model and get it installed before the deadline.
  2. Save your documentation
    We’ll provide:
    • A detailed invoice
    • Manufacturer’s certification statement
    • SEER2 and HSPF ratings
  3. File IRS Form 5695
    Attach it to your 2025 tax return to claim the credit. You’ll receive the credit as a reduction in your tax liability.

For full instructions, refer to Energy.gov’s tax credit guide.

Can You Combine It with Local Rebates?

Yes — many Kentucky homeowners can stack the federal HVAC tax credit 2025 with local utility rebates, which can offer up to $750 in additional savings.

Combined Savings Example:

  • Federal Tax Credit: $2,000
  • Utility Rebate: $750
  • Total Savings: $2,750

We’ll help you file for both — no need to navigate rebate programs alone.

Why Homeowners Should Act Now

This credit is set to expire at the end of 2025 unless Congress chooses to extend or replace it. That means there’s a hard deadline — and missing it could cost you thousands.

Reasons to Upgrade Now:

  • Avoid higher pricing from 2026 inflation and demand
  • Lock in 0% financing on qualifying installs
  • Ensure your system is installed before the cutoff
  • Lower your monthly energy bills immediately

FAQs About the HVAC Tax Credit 2025

1. How much is the HVAC tax credit worth?

Up to $2,000 per year for qualifying HVAC upgrades, specifically air-source heat pump systems.

2. What’s the deadline to qualify?

Your system must be fully installed by December 31, 2025.

3. What systems qualify for the credit?

Heat pumps that meet CEE Tier 1 or Tier 2 standards qualify. Lexington Electrical & HVAC installs eligible 15 SEER2 and 17 SEER2 systems.

4. Can I claim the credit more than once?

Yes, you can claim it each year you install a qualifying system — up to the annual limit.

5. Can I combine the tax credit with a rebate?

Yes! Most utility rebates are stackable with the federal tax credit.

6. What documentation do I need?

You’ll need IRS Form 5695, a manufacturer certification, and your installation invoice — we provide all of these.

7. Is this available for new construction?

No. The tax credit only applies to upgrades made to existing, primary residences.

Conclusion

The HVAC tax credit 2025 is a rare opportunity to save thousands while upgrading your home’s comfort and energy efficiency. But with the clock ticking toward the December 31, 2025 deadline, waiting too long could mean missing out entirely.

👉 Contact Lexington Electrical & HVAC today for a free consultation on qualifying systems — including 15 SEER2 and 17 SEER2 American Standard heat pumps. We’ll help you lock in your $2,000 credit, explore local rebates, and install a system that pays you back in long-term energy savings.

And don’t forget — join our Cool & Cozy Club for ongoing maintenance and priority service that protects your investment year-round.