Tax Incentives
The Inflation Reduction Act brought back the previously expired 25C Non-Business Energy Tax Credit under a new name starting January 1, 2023—the EEHIC. These new tax credits are available through 2032. Improvements made in 2022 may qualify; contact your tax professional for additional information.
Overview
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.
Status
Available Now
The following are annual limits for specific types of qualifying improvements:
Following is the breakdown of the 25C Energy Efficient Home Improvement Credit (EEHIC) tax incentives, including the breakdown of potential tax credits for homeowners.
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
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%
Must be principle residence
Cannot be combined with the HEEHRBP
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.
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 |
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.
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