Tax Incentives for Buying a New HVAC System

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With nearly 50% of the energy used in your house going directly to heating and cooling, your HVAC system plays an important role in determining your monthly utility costs. If you’re looking for ways to save on utility costs, you may want to consider a new HVAC system.

Now is the time to use federal tax credits for residential energy efficiency that expire December 31, 2021. If your system is breaking down frequently, below a SEER rating of 14, or older than 10 years, you can invest in a new system and benefit from a variety of offer rebates, promotions, financing, and tax incentives to help reduce system costs. Here are some ways to take advantage of these programs while they’re still available.

Federal HVAC Tax Credit

The U.S. government offers the 25C tax credit for high-efficiency heating and cooling equipment. If you qualify for the tax credit, you’ll be able to receive credit on your next tax return. IRS Form 5695 provides exact specifications for these residential energy tax credits. Here are some of the specifics:

  • The federal tax credit covers up to 10% of the HVAC system cost up to $500.
  • There’s a $300 maximum credit for qualifying central air conditioners, heat pumps, packaged units, and ductless mini-split systems.
  • There’s a $150 maximum credit available for qualifying boilers and furnaces.
  • Equipment must be installed in your main residence owned by you. Rental and second homes are not eligible for this tax credit.
  • To be eligible, the HVAC products must be Energy Star certified. Products earning the Energy Star label have met strict energy-efficiency specifications set by the EPA.
  • The HVAC unit must be at least 16 SEER rating. SEER rating is the Seasonal Energy Efficiency Ratio and the higher the SEER rating, the more money you’ll save over the lifespan of the HVAC system.


Phoenix area utility companies offer several rebate possibilities:

  • For utility customers, APS offers a $200 rebate for new, energy efficient AC units with a minimum of 15 SEER rating.
  • SRP utility customers receive a rebate per system tonnage. For instance, if you buy a 3-ton multi-stage air conditioner, you’ll earn $450 in rebates.

Call Bruce’s

When it comes to getting the maximum tax credits and rebates, work with an industry leader. At Bruce’s, we stay current on all the ways that you can save. Call us today at 480-968-5652.