Energy Tax Credits for 2023

Upgrading heating and cooling equipment can be daunting and nerve-wracking for many people. Few enjoy spending hundreds, if not thousands, of dollars on appliances like air conditioners and heaters. But, thanks to the newly introduced federal tax credits, managing these costs has become easier. Read on to learn how to benefit from the Inflation Reduction Act of 2022.

Understanding the Inflation Reduction Act of 2022

Many people are struggling with the current inflation and the rising food, gas, and energy cost. As a response to this problem, the U.S. Government adopted the Inflation Reduction Act of 2022. This law is an attempt to slow down the rate of inflation and provide a bit of relief to taxpayers. As part of this new law, taxpayers can claim a series of credits and deductions on their taxes when they upgrade to energy-efficient cars, air conditioners, heaters, and other products. In the following section, we will discuss some of the HVAC-specific credits and rebates available to homeowners nationwide. 

Residential Property Credit: Tax Section 25C 

Most homeowners will be relieved to learn about the residential property credit, Tax Section 25C. This credit provides equal to 30% of installation costs when homeowners choose an HVAC product they install that meets the requirements for high-efficiency tier, ENERGY STAR certified metrics. Dream Team does business in Louisiana, so we will inform you of the requirements you need to meet when living in the southern part of the United States. 

Heat Pumps

Heat pump installations can qualify for a $2,000 tax credit if they meet the following criteria: 

  • Split Ducted Heat Pump: SEER2 ≥15.2, EER2 ≥11.7, HSPF 2 ≥ 7.8
  • Non-Ducted Heat Pump: SEER2 ≥16, EER2 ≥12, HSPF 2 ≥ 9
  • Packaged Heat Pump: SEER2 ≥15.2, EER2 ≥10.6, HSPF 2 ≥ 7.2


A $600 tax credit is available in 2023 for the purchase of gas-fired forced air furnaces rated at 97% AFUE.

Air Conditioners

To qualify for a $600 tax credit, your new air conditioning system must meet the following criteria:

  • Split Air Conditioning
    • Nationally: SEER 2 ≥16, EER2 ≥12, 
  • Packaged Air Conditioning
    • Nationally: SEER 2 ≥15.2, EER2 ≥11.5

Residential Energy Efficient Property: Tax Section 25D

Homeowners can also take advantage of a 30% credit for their installation costs when they install an ENERGY STAR certified, geothermal heat pump.

High-Efficiency Electric Home Rebate Program (HEEHRP)

As part of the Inflation Act of 2022, homeowners can also take advantage of receiving income-based rebates. This rebate program offers 100% and 50% rebates, depending on your eligibility: 

  • There is a 100% rebate available to households earning 80% of the local median income.
  • A 50% rebate is available to households earning between 80% and 150% of the local median income. 

Those earning more than 150% of the local median income do not qualify for this rebate program. 

Call Dream Team for High-Quality HVAC Installation

Thanks to all the wonderful tax credits and rebates available, there has never been a better time to make those HVAC upgrades in your home. Call Dream Team today to get in touch with the most qualified and experienced installation technicians in the area. 

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