2023 HVAC Tax Credits – Inflation Reduction Act
As of 1/1/2023 homeowners can qualify for up to $2,000 in federal tax credits when you install eligible heat pumps and air conditioners in your principal residence.
HVAC TAX CREDIT QUICK REFERENCE CHART*
*Regional Standards for South Region (including Arizona)
| Tax Credit | Equipment | Type | SEER2 | EER2 | HSPF2 |
|---|---|---|---|---|---|
| Up to $2000 | Heat Pump | Split HP | 15.2 | 11.7 | 7.8 |
| Ductless HP | 16.0 | 12.0 | 9.0 | ||
| Packaged HP | 15.2 | 10.6 | 7.2 | ||
| Up to $600 | Air Conditioner | Split AC | 16.0 | 12.0 | N/A |
| Packaged AC | 15.20 | 11.50 | N/A |
Tax Section 25C, Nonbusiness Energy Property Credit
Effective Jan 1, 2023: Provides a tax-credit to homeowners equal to 30% of installation costs for the highest efficency tier products, up to a maximum of $600 for qualified air conditioners and furnaces, and a maximum of $2,000 for qualified heat pumps.
The most commonly installed system in Arizona are Air Source Heat Pumps, which do qualify for the tax credit up to $2,000 (up to 30% of the total project). To receive the credit, the system must meet or excel the efficiency ratings outlined in the above chart.
FAQs:
Q: Does my system that I bought before 1/1/2023 qualify for this tax credit?
A: No, only equipment installed after 1/1/2023 that meets the efficiency rating will qualify for the tax credit.
Q: Do I need to fill out any forms to receive the credit?
A: Yes, you must submit IRS Form 5695 and include it with your tax return. We recommend you consult a tax professional to ensure you receive the maximum benefit.