Energy Efficiency and Tax Credits: Do Wall Units Qualify?

When you’re upgrading your through-the-wall air conditioner, there’s a question almost every homeowner asks:
“Can I get a tax credit for this?”

With the rise of energy-efficient systems and the Inflation Reduction Act (IRA) expanding federal incentives, 2025 is the best time in years to make your home’s cooling more efficient — and get rewarded for doing it.

Best Through The Wall Air Conditioners

But here’s the catch: not every unit qualifies.

To claim tax credits or rebates, your wall unit needs to meet specific energy efficiency standards and certifications — usually through ENERGY STAR or related state programs.

So, let’s walk through how efficiency ratings work, which wall units qualify for tax credits, how much you can save, and exactly how to claim those incentives.

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💡 1. Can Through-the-Wall Air Conditioners Really Qualify for Tax Credits?

Yes — in many cases, they can.

If your wall unit meets ENERGY STAR certification standards and falls under the eligible product types recognized by the Energy Efficient Home Improvement Credit (25C), you can receive a 30% tax credit on the cost of the unit and installation — up to $1,200 per year.

Why This Matters:

Through-the-wall ACs were once overlooked in federal energy programs, but recent expansions under the Inflation Reduction Act now include them, provided they meet or exceed efficiency thresholds.

🧠 Mark’s Perspective:
“I used to think only heat pumps or full HVAC systems qualified for credits. But when I upgraded my wall unit last summer, I learned that certified models from GE and Friedrich actually made the list.”

Learn more:
➡️ Energy.gov – Tax Credits for Energy Efficiency

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⚙️ 2. Understanding Efficiency Ratings: CEER, EER & ENERGY STAR

Before you can claim any rebate or tax credit, your wall unit’s efficiency ratings must check out. Let’s break them down.

🧮 CEER — Combined Energy Efficiency Ratio

• The most accurate measure of total system efficiency for through-the-wall and room ACs.

• Accounts for both active energy use and standby (when the unit’s on but not cooling).

• Higher CEER = better performance and lower utility bills.

👉 Minimum CEER for ENERGY STAR certification:

• ≥ 10.7 for small units (<8,000 BTU)

• ≥ 9.8–10.3 for larger models

⚡ EER — Energy Efficiency Ratio

• Measures cooling performance at a specific temperature (95°F).

• Commonly listed on spec sheets and useful for comparing brands.

🌟 ENERGY STAR Certification

• The gold standard for rebates and federal credits.

• ENERGY STAR units use 10–25% less energy than non-certified models.

• Certification is verified through the EPA, so homeowners can be confident they’re buying a system that qualifies.

💡 Mark’s Tip:
“Look for the blue ENERGY STAR logo on the box — it’s the key that opens rebate doors.”

Learn more:
➡️ ENERGY STAR – Room Air Conditioners

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🧱 3. What Types of Wall Units Qualify for Energy Rebates?

Not every air conditioner gets the green light.
Here’s what counts — and what doesn’t.

✅ Eligible for Rebates or Credits

• ENERGY STAR Certified Through-the-Wall ACs

• Wall-Mounted Heat Pumps (dual heating and cooling)

• Units with Smart Thermostat or Inverter Technology

• Energy-efficient models installed with compatible wall sleeves

🚫 Not Eligible

• Portable air conditioners.

• Non-certified models below minimum CEER thresholds.

• Units installed without proper exterior venting.

🧠 Mark Says:
“If you’re buying a wall unit without checking the label, you’re leaving money on the table. ENERGY STAR models might cost $50–$100 more upfront, but you’ll save that and more in rebates.”

External Source: IRS – Form 5695 Instructions

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🧾 4. How the 2025 Federal Tax Credit Works

The Energy Efficient Home Improvement Credit (25C) — part of the Inflation Reduction Act (IRA) — helps homeowners offset the cost of qualifying home energy upgrades.

🧩 What You Can Claim:

• 30% of total costs (unit + installation)

• Up to $1,200 per year

• Applies to Energy Star-certified wall units and heat pumps

🧾 Example:

Let’s say you install a GE or Friedrich Energy Star through-the-wall unit for $1,000 (including installation).
You can claim:

30% × $1,000 = $300 federal tax credit

🧰 Who Qualifies:

• You must own and live in the home (primary residence).

• The equipment must be new and certified (not secondhand).

• You must retain proof of purchase and model documentation.

Learn more:
➡️ White House – Clean Energy Tax Credits

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🌍 5. Don’t Miss State and Local Rebates

Federal credits are just the beginning.
Most U.S. states and utility companies also offer rebates for energy-efficient air conditioners, including through-the-wall units.

💡 Mark’s Tip:
“Utility rebates are the best-kept secret in HVAC. They’re usually easier to claim than federal ones — sometimes the discount comes right off the purchase price.”

External Source: ENERGY STAR – Rebate Finder Tool

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💵 6. How Much Can You Actually Save?

Upgrading from an older wall unit to a modern, efficient model delivers double benefits: lower energy bills and financial incentives.

Example:

• Old unit (CEER 9.0): 1,300 kWh/year

• New unit (CEER 12.0): 1,000 kWh/year

• Savings: 300 kWh/year

• At $0.15 per kWh = $45/year saved

Now add your $300 tax credit and potential $150 utility rebate, and your total savings in the first year can exceed $500.

External Source: Energy.gov – Estimating Appliance Energy Use

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🧰 7. How to Verify If Your Wall AC Qualifies

Step-by-Step Checklist:

1. Find the ENERGY STAR Logo — It must appear on the unit or manual.

2. Check Model Number — Use the ENERGY STAR Product Finder to confirm.

3. Keep Your Documentation — Save purchase receipts and efficiency labels.

4. Claim via IRS Form 5695 — File during your next tax return.

🧠 Pro Tip:
“Take a photo of your receipt and nameplate label. The IRS and rebate agencies often require exact model verification.”

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🧾 8. Business and Rental Property Eligibility

If you’re a landlord or small business owner, you may still qualify for commercial energy deductions.

Section 179D – Energy Efficient Commercial Buildings Deduction

• Covers HVAC improvements in commercial or multifamily buildings.

• Deductions up to $5 per square foot (depending on energy savings).

• Requires professional certification.

External Source: IRS – 179D Commercial Energy Deduction

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🔋 9. Comparing Wall Units to Other Cooling Systems

While wall units won’t match the efficiency of mini-splits, they cost a fraction of the price — and they still qualify for significant tax savings when ENERGY STAR certified.

External Source: ENERGY STAR – Room AC Comparison

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🧠 10. Mark’s Real-World Example

“Last summer, I replaced a 10-year-old unit with a GE AJEQ12DWJ — an ENERGY STAR model rated 12.1 CEER.
The total cost was about $1,050 including installation.
After filing IRS Form 5695, I got a $315 tax credit back, plus a $150 utility rebate from my local provider.
My electric bill dropped roughly $10–12 a month, and the unit’s whisper-quiet.
The upgrade basically paid for itself in two years.”

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🧾 11. Common Myths About Wall Unit Rebates

💬 Mark’s Note:
“I’ve seen customers skip claiming rebates because they thought wall units didn’t count. That’s hundreds of dollars lost.”

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🧠 12. Step-by-Step: Claiming Your Tax Credit

1. Buy and install an ENERGY STAR through-the-wall air conditioner.

2. Keep all receipts and product documentation.

3. Download IRS Form 5695

4. Complete Part II – Energy Efficient Home Improvement Credit.

5. Submit with your next tax return.

If you also received state rebates, they typically don’t affect your federal tax credit — you can claim both.

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🌿 13. Why Energy Efficiency Pays Off Long-Term

Even if the tax credit didn’t exist, efficient wall units still save real money.
Here’s how:

Combine that with quieter operation and smaller carbon footprint — and it’s a win-win.

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🧠 14. Mark’s Final Advice: “Plan Your Upgrade Like an Investment”

“When I help friends choose a new through-the-wall AC, I tell them to look beyond the sticker price.
Between rebates, credits, and lower bills, efficient units always pay off.
The key is to check for that ENERGY STAR certification and keep your paperwork organized.
The government’s paying you to go green — take advantage of it.”

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🏁 15. Final Thoughts: Smart Cooling That Pays You Back

In 2025, through-the-wall air conditioners aren’t just practical — they’re financially smart.
If you choose an ENERGY STAR-certified model, you’ll enjoy quieter, more efficient comfort while qualifying for federal and state incentives worth hundreds.

So before you order your next wall unit, make sure it’s certified — and keep those receipts. You might be pleasantly surprised when tax season comes around.

In the next topic we will know more about: Top Through-the-Wall Air Conditioner Brands Compared: LG vs. GE vs. Friedrich