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IRA HVAC Tax Credit Estimator

Estimate your federal IRA heat pump and efficiency tax credits based on equipment type and installation cost.

IRA Tax Credit Estimator

Inflation Reduction Act 25C credits for HVAC · Free

The IRS allows the full installed cost including labor for this credit

Credit rules for Air-Source Heat Pump
  • ✓Credit rate: 30% of qualified equipment cost
  • ✓Maximum credit: $2,000 per year
  • !Must meet CEE Tier 1 requirements. Covers heat pump water heaters too (separate $2,000 cap).

Why Use This Tool?

The IRA provides up to $2,000/year in federal tax credits for qualifying HVAC equipment. Many homeowners leave this money unclaimed because they don’t know which equipment qualifies or how to calculate the credit. This estimator walks you through it.

About This Tool

The Inflation Reduction Act (IRA) of 2022 provides homeowners with significant federal tax credits for energy-efficient HVAC upgrades. The credits are claimed on IRS Form 5695 and include: up to $2,000 for qualifying heat pumps (30% of cost), up to $600 for qualifying central AC or gas furnace replacements, and up to $150 for home energy audits. This estimator calculates your potential credit based on equipment type and installation cost.

How It Works

1
Select your equipment type

Different IRA credits apply to different equipment: heat pumps (up to $2,000/year), central AC or gas furnace meeting efficiency thresholds ($300–$600), or home energy audit ($150).

2
Enter your installation cost

Include both equipment and installation labor. The credit is calculated on the total installed cost, not just equipment.

3
Confirm equipment eligibility

To qualify, heat pumps must meet ENERGY STAR Most Efficient criteria. Central AC must be 16+ SEER2. Gas furnaces must be 97%+ AFUE. Your contractor should confirm equipment qualification before installation.

4
View your estimated credit

The estimator shows your federal credit amount and reminds you to check for state-level rebates and utility incentives that may stack on top of the federal credit.

Cost Context

A qualifying heat pump installation costing $7,000 generates a $2,000 federal tax credit (30%, capped at $2,000). Combined with state rebates and utility incentives available in many markets, total incentives can reach $4,000–$8,000 on a heat pump installation. The credit is nonrefundable but resets annually through 2032.

Frequently Asked Questions

How much is the IRA heat pump tax credit?
The IRA provides a 30% federal tax credit on qualifying heat pump installations, up to $2,000 per tax year. On a $7,000 heat pump installation, your credit is $2,000 (30% = $2,100, capped at $2,000). The credit is nonrefundable — it reduces your tax liability but cannot exceed what you owe.
What HVAC equipment qualifies for IRA credits?
Qualifying equipment includes: air-source heat pumps meeting ENERGY STAR Most Efficient criteria (up to $2,000 credit); central AC meeting 16+ SEER2 / 12+ EER2 (up to $600 credit); gas furnaces at 97%+ AFUE (up to $600 credit); home energy audits (up to $150 credit). Your contractor should provide the manufacturer certification statement confirming qualification.
Can I claim IRA credits every year?
Yes. The IRA annual credit limit resets each tax year through 2032. If you install a heat pump in 2025 and a heat pump water heater in 2026, you can claim the credit (up to $2,000/year) in both years. Plan multi-year upgrades to maximize the annual reset.
How do I claim the IRA HVAC tax credit?
Claim on IRS Form 5695 (Residential Energy Credits) with your federal tax return. You will need the manufacturer certification statement from your contractor confirming the equipment qualifies. Keep all receipts and the certification statement in your tax records.
Are there additional state incentives on top of the federal credit?
Yes — many states and utilities offer additional rebates that stack on top of the federal credit. Check dsireusa.org for your state. Some utilities offer $500–1,500 additional rebates for qualifying heat pumps. IRA also includes the High-Efficiency Electric Home Rebate Act (HEEHRA) for lower-income households, with even larger point-of-sale rebates.

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