Federal Energy Efficiency Tax Credit & HVAC Equipment Tax Incentives

Beyond promotions, rebates, and financing, taking advantage of the innovation of a Lennox^® system may also mean you can take advantage of federal tax credits on high-efficiency systems to save even more.

Read on to see if your system qualifies for a federal tax credit

2022 Inflation Reduction Act

On August 16, 2022, the U.S. government signed into law the Inflation Reduction Act (IRA) in an effort to reduce greenhouse gas (GHG) emissions by 40% by 2030. The most meaningful impact to HVAC is the Energy Efficient Home Improvement Tax Credit (25C).

Lennox boasts a broad assortment of ENERGY STAR® qualifying products eligible for these programs.

What Does This Mean for You?

Through the IRA, you will have access to cost-saving options when purchasing energy-efficient and electric appliances or making home improvements to electrify your home or increase its energy efficiency through these programs.

Energy Efficient Home Improvement Tax Credit (25C) Program

The previous Nonbusiness Energy Property credit (25C) for installing high-efficiency equipment was extended through 2022 and provides federal tax credits of up to $500.
The Energy Efficient Home Improvement Credit (25C) was amended in 2023 and will remain effective until December 31, 2032. It increases the tax credit limits for high-efficiency equipment as follows:

Eligible equipment includes:
- Heat pumps and heat pump water heaters
- Energy-efficient HVAC systems (including furnaces, boilers, and central AC)
- Qualifying units meet or exceed the highest CEE efficiency tier that is not the advanced tier.
The 25C credit has an annual cap of $1,200 (except heat pump):
- 30% of cost up to $600 each for a qualified air conditioner or gas furnace, with an annual cap of $1,200
- Up to $2,000 with a qualified heat pump, heat pump water heater, or boiler
- Gas furnace and air conditioner can be combined for a total credit up to $1,200
- Total credit up to $3,200 annually with qualifying units

There are no income requirements for this tax credit, and it cannot be combined with other federal programs.

Check here for 2024 25C qualifying equipment

Click here to Understand tax savings of the 25C Tax Credit

Click here to find out if your system match could qualify for the tax credits.

*Note: The 2023 application process is not yet available from the IRS. Check back for updates and certificates, if applicable.

2023 Tax Certificates

Explore the certificate links below so see if you qualify. If your equipment is mentioned on the certificate, download it for your tax purposes.

TAX CERTIFICATE – HEAT PUMPS

TAX CERTIFICATE – AIR CONDITIONERS

TAX CERTIFICATE - FURNACES

TAX CERTIFICATE – MINI-SPLITS

TAX CERTIFICATE – PACKAGED UNITS

FAQS

Where can I learn more about energy tax credits?

If you have additional questions about tax credits, speak with a tax professional. Energystar.gov also provides details about recent tax credit changes.

When will forms and certificates be available for 2023?

We are waiting on the IRS to define the application process for 2023 and beyond and will update information when it is available. There is not currently an established timeline for this.

What is the 25C Tax Credit?

The Energy Efficient Home Improvement Credit (25C) incentivizes electrification and energy efficiency by lowering the total cost of qualified electric products.

What is the difference between the 25C Tax Credit in 2022 and 2023?

The previous Nonbusiness Energy Property credit (25) for installing high efficiency equipment was extended through 2022 and provided federal tax credits of up to $500. The amended Energy Efficient Home Improvement Credit (25C) began in 2023 and extends through 2032. It increases the tax credit limits for high-efficiency equipment. Also beginning in 2023, there is no lifetime limit and taxpayers can qualify each calendar year with a qualifying purchase.

How does a homeowner receive the 25C tax credit?

Those who have purchased and installed qualifying equipment can claim the tax credit when filing taxes with the IRS using the Residential Energy Credits tax form (form 5695). When filing in 2023, a unique identification number will be required. Details of this “unique identification number” requirement are still pending.

Can a taxpayer claim the 25C credit for expenditures incurred on an existing home? What about a newly constructed home?

Taxpayers who have purchased and installed qualified products as a renovation or addition to an existing home can claim the 25C tax credit. Newly constructed homes are not eligible for the 25C tax credit.

Does the 25C tax credit require taxpayers to have a tax liability to receive the credit?

Yes – The 25C credit is a nonrefundable personal tax credit. A taxpayer claiming a nonrefundable credit can only use it to decrease or eliminate a tax liability. A taxpayer will not receive a tax refund for any amount that exceeds the taxpayer’s tax liability for the year.

Can the 25C tax credit be rolled over to the next year?

No – A taxpayer may not carry forward the 25C credit. Thus, if a taxpayer cannot claim all or a portion of the credit in the year in which the related expenditure is treated as made, the unused amount of the credit will expire.

Other Ways to Save—Local Utility Rebates

You may be eligible for additional utility rebates in your region. Contact your local utilities company to find out, or visit dsireusa.org to search the DSIRE Database of State Incentives for Renewables and Efficiency^®.