HVAC Tax Credits: What Furnaces, ACs, and Boilers Actually Earn

The heat pump gets the $2,000 headline, and conventional HVAC gets the fine print: $600 per item for qualifying furnaces, central air conditioners, and boilers. Smaller money, but a furnace replacement is rarely optional, and if you’re writing that check anyway, the difference between a qualifying model and a near-miss is $600 for choosing carefully.

Here’s the equipment-by-equipment breakdown, and where the panel upgrade quietly doubles the claim.

The credit, equipment by equipment

Everything below sits inside the Energy Efficient Home Improvement Credit at 30% of installed cost, labor included, capped at $600 per item, all sharing the $1,600 general annual bucket.

The thresholds are the story in that table. A 97% AFUE furnace is condensing equipment at the top of the market, priced maybe $600 to $1,200 above the 92% builder-grade unit that earns nothing. The credit roughly covers the upgrade premium, which is presumably the point. Ask your contractor to quote both tiers and put the AFUE and SEER2 numbers on paper, then verify the specific model, because “high efficiency” in a sales brochure and 97% AFUE in the tax code are different standards.

Since 2025, qualifying equipment also needs the manufacturer’s QM code on your return. Same drill as the rest of 25C: collect it with the invoice.

The panel upgrade multiplier

An electrical panel upgrade earns its own $600 when it’s installed to enable other qualifying equipment. An old 100-amp panel that can’t feed a new AC condenser is the classic case: the panel work qualifies alongside the AC, and the pair claims up to $1,200 where the AC alone claimed $600.

The panel needs a qualifying reason. A standalone panel refresh with no enabling role earns nothing, so if both projects are on your horizon, do them together or document the connection.

Furnace vs. heat pump, the credit version

Before committing to a furnace replacement, price the credit gap. The furnace earns $600. A heat pump earns $2,000 from its own separate bucket, replaces the AC as well, and frequently wins the ten-year cost race outright once state rebates stack in. The operating cost calculator compares them at your actual utility rates, and the honest answer varies by region: cheap-gas cold-climate homes still have a real furnace case, and the full comparison walks through it.

If the furnace wins, buy the 97% AFUE model and take your $600 without guilt.

Frequently asked questions

Does a new thermostat qualify?

No, not even smart ones, a surprise covered in the smart thermostat guide. Utility rebates are the thermostat channel instead.

Ductwork replacement?

No credit for ducts themselves. Duct sealing with mastic qualifies as an air sealing material, a small but legitimate claim most people skip.

Can I claim a furnace and an AC in the same year?

Yes, $600 each, both feeding the $1,600 general bucket. Add a water heater and you’re at the bucket’s edge, and anything more that year is wasted. A split across two years keeps every dollar when the project list runs long.

Repairs or maintenance?

No. The credit wants new qualifying equipment placed in service. A $900 blower motor replacement is a repair, whatever the invoice calls it.

How do I actually claim these?

Form 5695, Part II, for the year the equipment went into service, with receipts and QM codes kept for three years. Nonrefundable, no carryover, so check your tax liability if the year’s claims run large.

The move

Replacing HVAC is usually a distress purchase with a dead system in July. The credit rewards the ten minutes of composure it takes to demand the qualifying tier and the itemized invoice. Price the qualifying model, check whether your panel needs the enabling upgrade, and run the year’s full picture through the energy tax credit calculator before the crew arrives.