Federal Tax Credits
- Federal Tax Credits: Act Now—or Miss Out
Originally, the Inflation Reduction Act of 2022 promised homeowners generous federal incentives for energy-efficient upgrades—extending credits through 2032.The One Big Beautiful Bill Act (OBBBA) of July 2025 changed that. Now, critical credits that include HVAC equipment come with a new expiration date: December 31, 2025.
What’s At Stake
| Tax Credit Type | Covers | Original Expiration | New Deadline |
|---|---|---|---|
| Section 25C – Energy Efficient Home Improvement Credit | Heat pumps, central ACs, furnaces (30% credit, up to $2,000 for heat pumps; $600 for AC/furnace) | Through 2032 | Expires Dec 31, 2025 |
| Section 25D – Residential Clean Energy Credit | Solar, geothermal, battery storage (30%) | Through 2035 | Expires Dec 31, 2025 |
To qualify, the equipment must be installed and fully operational—“placed in service”—by the end of 2025. Starting this year, a manufacturer-issued Product Identification Number (PIN) is required to claim the credit.
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HVAC News
- SEER to SEER2: Real-World Efficiency Standards Are Here
As of January 1, 2023, the Department of Energy introduced SEER2, a stricter efficiency rating that reflects actual usage conditions more accurately than the old SEER system.
- Northern states now require at least 13.4 SEER2, which is equivalent to the previous 14 SEER.
- Southeast and Southwest regions (including Florida) require 14.3 SEER2 for split systems under 45,000 BTU, with EER2 and HSPF2 rating adjustments depending on unit specifications.
The takeaway? Any repeat equipment installation must comply with these region-based SEER2 standards—or it won’t pass muster.
- Why These Changes Matter for You
- Don’t assume 2032 is still the target—the credit window closed early.
- Only systems meeting SEER2 standards installed before year-end will qualify for tax benefits.
- Keep all documentation—installation receipts, PINs, utility permits, and Form 5695—for your tax filing.
- Smart Next Steps for Homeowners
- Check efficiency compliance: Partner with your contractor to confirm that your equipment is SEER2-certified per DOE region standards.
- Schedule promptly: Aim to have your system installed by mid-December 2025 to buffer against delays
- Track paperwork: Gather all manufacturer documentation, including PINs and invoices, to file IRS Form 5695.
- Ask your HVAC provider: Make sure the equipment and installer meet federal standards and can provide all required documentation and guidance.
Final Word
Federal tax credits for HVAC equipment are expiring at the end of 2025—far sooner than originally planned under the IRA. Coupled with updated SEER2 mandates, this makes 2025 a critical year for homeowners looking to upgrade. Don’t delay—your savings (and compliance) depend on acting now.
