What the 2024 HVAC tax credit covers
The federal tax credit for HVAC systems in 2024 is part of the Inflation Reduction Act and covers heat pumps, central air conditioners, and furnaces that meet specific efficiency standards. You claim the credit on your tax return for the year you installed the system, and the credit amount depends on the type of equipment and your household income.
The credit is not a rebate you receive upfront — it reduces the federal income tax you owe when you file. If you install a may have access to heat pump, you may receive up to $2,000. A may have access to central air conditioner or furnace can earn up to $600 each. Some households with lower incomes may receive a larger credit through an advanced payment option, though that program has specific enrollment requirements.
The equipment must be installed in your primary residence in the United States, and you must have owned and lived in the home for at least two of the five years before installation. Rental properties and second homes do not may have access to.
Key Takeaways
- Heat pumps may have access to for up to $2,000; central air conditioners and furnaces for up to $600 each, based on efficiency ratings and your income level.
- The system must be installed in your primary home, and you must have owned it for at least two of the past five years.
- You claim the credit on your federal tax return for the year the system was installed, not when you purchase it.
- Efficiency requirements vary by equipment type and your location's climate zone, so your contractor should verify the system meets Department of Energy standards.
- Some lower-income households can receive the credit as an advance payment directly to the contractor instead of waiting to claim it on taxes.
Heat pump systems and the $2,000 credit
A heat pump is an HVAC system that heats and cools your home by moving air or ground heat rather than generating it. Air-source heat pumps (the most common type) pull heat from outside air even in cold weather. Ground-source (geothermal) heat pumps pull heat from the earth and are more efficient but more expensive to install.
Both types may have access to for the $2,000 credit if they meet Department of Energy efficiency ratings. For air-source heat pumps, the system must have a Heating Seasonal Performance Factor (HSPF2) of at least 8.5 in most climates, or 7.8 in the coldest regions. Ground-source heat pumps must have a Coefficient of Performance (COP) of at least 3.3 for heating.
The $2,000 is the maximum credit per household per year, even if you install multiple heat pumps. If your household income exceeds certain thresholds (which vary by state and family size), the credit amount may be reduced or you may not may have access to at all. Your contractor or tax preparer can help determine whether your income affects the credit.
Central air conditioners and furnaces: $600 each
A central air conditioner cools your home and must have a Seasonal Energy Efficiency Ratio (SEER2) rating of at least 16 to may have access to for the $600 credit. A furnace heats your home and must have an Annual Fuel Utilization Efficiency (AFUE) rating of at least 95% to may have access to.
You can claim both credits in the same year if you install both a furnace and a central air conditioner — that is, up to $1,200 total for both systems. However, if you install a heat pump (which provides both heating and cooling), you cannot also claim the furnace or air conditioner credit for the same heating or cooling function.
The efficiency ratings are set by the manufacturer and should appear on the equipment's label or in the product documentation. Your contractor should confirm the ratings before installation and provide them to you in writing so you have proof for your tax return.
Income limits and how they affect your credit
The credit amount phases out if your household income exceeds certain limits. The thresholds depend on your filing status and vary by state. For example, in 2024, a single filer in a lower-cost-of-living state may begin to lose the credit at a different income level than a single filer in a high-cost state.
You will need to know your modified adjusted gross income (MAGI) from your tax return to determine whether the phase-out applies to you. If your income is above the threshold for your state and filing status, the credit is reduced by a percentage of the excess income. At a certain income level, the credit reaches zero.
The IRS publishes income limits by state each year. Your tax preparer can look up the limits for your state and filing status, or you can find them on the IRS website under the Inflation Reduction Act section. If you are unsure whether you may have access to, it is worth checking before you install the system, because the credit is based on the year of installation.
How to document the system for your tax return
To claim the credit, you will need to keep records of the equipment installed and its efficiency ratings. Ask your contractor for an invoice that lists the make, model, and serial number of the HVAC system, along with the SEER2, HSPF2, AFUE, or COP rating. The contractor should also provide the installation date and the address where it was installed.
You will also need to certify on your tax return that you owned and lived in the home for at least two of the five years before installation. Keep your proof of ownership (deed, mortgage statement, or property tax bill) and proof of residency (utility bill or lease) in case the IRS asks for documentation later.
Form 5695 is the IRS form used to claim residential energy credits, including the HVAC credit. Your tax preparer will complete this form and attach it to your federal tax return. If you are filing your own taxes, you can download Form 5695 from the IRS website and follow the instructions for the specific credit you are claiming.
Advanced payment option for lower-income households
Some households with lower incomes can receive the HVAC credit as an advance payment directly to the contractor, rather than claiming it on their tax return. This program, called the Inflation Reduction Act's direct payment option, allows the contractor to receive the credit upfront and pass the savings to you.
To use this option, you must have a household income at or below 80% of your area's median income, and you must own and live in the home. The contractor must be registered with the IRS to receive advance payments. Not all contractors participate, so you will need to ask whether they offer this option.
If you use the advance payment option, you cannot claim the same credit on your tax return. The credit is applied once, either as an advance payment or as a tax credit, but not both. Your contractor should explain how the payment works and what documentation you need to provide.
What does not may have access to for the credit
The credit does not cover labor, installation, or any other costs beyond the equipment itself. It also does not cover repairs, replacements of parts, or maintenance of an existing system. The system must be new equipment installed in your home, not a used system or one that was already in place.
Ductless mini-split heat pumps and other specialized systems may have different efficiency requirements or may not may have access to at all, depending on the system type. Your contractor should verify with the Department of Energy specifications whether your specific system meets the requirements.
Systems installed in rental properties, vacation homes, or investment properties do not may have access to. The credit is only for your primary residence — the home where you live most of the year.
Frequently Asked Questions
Can I claim the credit if I had the system installed last year?
You claim the credit for the year the system was installed. If it was installed in 2023, you would claim it on your 2023 tax return (filed in 2024). If it was installed in 2024, you claim it on your 2024 return (filed in 2025). You cannot claim a credit for a system installed in a previous year if you did not claim it then.
What if my contractor says the system does not meet the efficiency rating?
Ask the contractor to provide the manufacturer's specifications in writing. The efficiency rating should be on the equipment label or in the product documentation. If the system does not meet the minimum rating, it does not may have access to for the credit. You may want to compare quotes from different contractors or consider a higher-efficiency model if you want to claim the credit.
Do I need to file a special form to get the advance payment instead of claiming it on my taxes?
The contractor handles the advance payment enrollment with the IRS, not you. You will need to provide proof of income and residency to the contractor so they can verify you meet the income limits. Ask the contractor what documents they need before you schedule installation.
Can I claim the credit if I rent my home?
No. You must own the home and have owned it for at least two of the five years before installation. Renters do not may have access to for this credit, even if they paid for the system themselves. Your landlord would be the one who could claim it, if they meet the other requirements.
What if I install both a heat pump and a furnace in the same year?
A heat pump provides both heating and cooling, so you cannot claim both the heat pump credit and the furnace credit for the same function. If you install a heat pump for heating and cooling, you claim only the $2,000 heat pump credit. If you install a furnace separately for heating and a central air conditioner for cooling (without a heat pump), you can claim both the $600 furnace credit and the $600 air conditioner credit.