Energy Efficient Home Improvement Credit (EEHIC): 25C Tax Credit

Overview

Earn up to $3,200 in Annual Tax Credit

This tax credit allows homeowners to earn up to $3,200 in an annual tax credit for lowering energy costs through installing high efficiency heating, ventilation, air conditioning (HVAC) systems and other appliances. The program will run until December 31, 2032, for eligible equipment upgrades or replacements.

If homeowners have a tax liability, they can claim 25C tax credits equal to 30% of the costs for installing eligible improvements, including new energy-efficient windows, doors, water heaters, furnaces, air conditioners, etc.

Status

Available Now

Qualified improvements

The following are annual limits for specific types of qualifying improvements:

$150 for home energy audits
$250 for an exterior door ($500 total for all exterior doors)
$600 for exterior windows and skylights; central air conditioners; electric panels and certain related equipment; natural gas, propane, or oil water heaters; natural gas, propane, or oil furnaces or hot water boilers
$600 for split and packaged Air Conditioning systems
$2,000 for electric or natural gas heat pump water heaters, electric or natural gas heat pumps, and biomass stoves and boilers

Potential tax credits

Following is the breakdown of the 25C Energy Efficient Home Improvement Credit (EEHIC) tax incentives, including the breakdown of potential tax credits for homeowners.

IRA Program

EEHIC (new 25C#)

Desc

Energy Efficient Home Improvement Credit (previously 25C)

Type

Tax Credit

Eligible Claim Dates

Qualified Property placed in Service after 12/31/2022 through 12/31/2032

HVAC Credits / Rebates

Up to 30% of qualified equipment or up to:

Heat Pump, Split (NORTH) = $2,000 (exception for hp's)

Heat Pump, Split (SOUTH) = $2,000 (exception for hp's)

Heat Pump, PAC (NORTH) = $2,000 (exception for hp's)

Heat Pump, PAC (SOUTH) = $2,000 (exception for hp's)

Heat Pump, Ductless (NORTH) = $2,000 (exception for hp's)

Heat Pump, Ductless (SOUTH) = $2,000 (exception for hp's)

AC, Split = $600

AC, PAC = $600

Furnace (gas)= $600

Furnace (oil) = $600

Energy Audit = $150

Labor can also be claimed

Limits

Total Annual Limit = $2,000 Heat Pumps & $1,200 for all others

Qualified Products

Heat Pump, Split (NORTH) = 15.2 SEER2, 10 EER2, 8.1 HSPF2

Heat Pump, Split (SOUTH) = 15.2 SEER2, 11.7 EER2, 7.8 HSPF2

Heat Pump, PAC (NORTH) = 15.2 SEER2, 10 EER2, 8.1 HSPF2

Heat Pump, PAC (SOUTH) = 15.2 SEER2, 10.6 EER2, 7.2 HSPF2

Heat Pump, Ductless (NORTH) = 16 SEER2, 9 EER2, 9.5 HSPF2

Heat Pump, Ductless (SOUTH) = 16 SEER2, 12 EER2, 9.0 HSPF2

AC, Split = 16 SEER2, 12 EER2

AC, PAC = 15.2 SEER2, 11.5 EER2

Furnace (gas)= 97%

Furnace (oil) = 90%

Eligibility

Open to any U.S.-based homeowner with a tax liability

Requirements

Must be principle residence

Cannot be combined with the HEEHRBP

Determining product and tax qualifications

The 25C tax credits are determined by the Consortium for Energy Efficiency (CEE) Tiers vs. ENERGY STAR^®. The IRA requires "… the highest CEE Tier that's not the Advanced Tier," which does include the new SEER2 values. Following are the CEE Tier levels for central air conditioners, and air source heat pumps for both the north, and south regions. Highlighted are the specific SEER2 requirements your system must meet, required by the IRA.

25C Tax Credit Minimum Requirements

30% of cost and $1,200 annual limit (Heat Pump annual limit of $2,000)

DOE Product	SEER2	EER2	HSPF2	AFUE %	Credit (per unit/yr)	Total Annual Limit
Heat Pump, Split (NORTH)	15.2	10.0	8.1	n/a	$2,000	$2,000
Heat Pump, Split (SOUTH)	15.2	11.7	7.8	n/a	$2,000	$2,000
Heat Pump, Package (NORTH)	15.2	10.0	8.1	n/a	$2,000	$2,000
Heat Pump, Package (SOUTH)	15.2	10.6	7.2	n/a	$2,000	$2,000
Heat Pump, Ductless (NORTH)	16.0	9.0	9.5	n/a	$2,000	$2,000
Heat Pump, Ductless (SOUTH)	16.0	12.0	9.0	n/a	$2,000	$2,000
AC, Split	16.0	12.0	n/a	n/a	$600	$1,200
AC, Package	15.2	11.5	n/a	n/a	$600	$1,200
Furnace, natural gas, propane	n/a	n/a	n/a	97%	$600	$1,200
Furnace, oil*	n/a	n/a	n/a	90%	$600	$1,200

Learn more

Consortium for Energy Efficiency

The Consortium for Energy Efficiency (CEE) is an EPA climate protection nonprofit with a mission to accelerate the availability and adoption of increasingly energy efficient products and services.

For more than 30 years, CEE has been influencing national manufacturers, stakeholders, trade associations, and government agencies to maximize the impact of energy efficiency programs and support strategic initiatives. CEE works with energy efficiency administrators throughout the U.S. and Canada to serve more than 50 million gas customers and 100 million electric customers.

CEE initiatives promote the manufacture, purchase, installation, and maintenance of verifiably energy-efficient HVAC products and services. Administrator members of CEE collaborate to emphasize energy efficiency, support higher baseline standards that reduce savings potential, and facilitate larger savings.

Learn more

Disclaimer: The advice offered here is intended as a basic guide only and not to be used as, or substituted for, professional tax preparation advice. We strongly advise you seek professional support for assistance and advise you to consult with a certified tax preparation specialist or CPA as appropriate.