Upgrading to a high-efficiency HVAC system isn’t just good for your energy bill—it’s good for your wallet right now, too. Thanks to new federal incentives, state rebates, and utility programs, homeowners can save hundreds to thousands of dollars when installing qualifying systems like R-32 AC and gas furnace combos.
Whether you’re looking to offset upfront costs or maximize long-term return, this guide breaks down everything you need to know about 2025 tax credits, rebates, and programs—with links to verified resources so you don’t leave money on the table.
🧾 What’s New in 2025?
The Inflation Reduction Act (IRA)—signed into law in 2022—provides extended and expanded home energy efficiency incentives through 2032. As of 2025, two major programs are helping U.S. homeowners:
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25C Tax Credit (Energy Efficient Home Improvement Credit)
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HOMES Rebate Program (Coming Soon in Some States)
Let’s explore both in detail.
✅ 1. The 25C Energy Efficient Home Improvement Credit
The 25C credit is available now and applies to the installation of qualified HVAC equipment, including:
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Air conditioners
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Heat pumps
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Furnaces
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Boilers
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Advanced controls like smart thermostats
💰 What You Can Get
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Up to 30% of the cost of eligible improvements
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Maximum annual credit: $1,200–$2,000
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$600 for qualified air conditioners or furnaces
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$2,000 for qualified heat pumps or heat pump water heaters
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📗 See official guidance at the IRS 25C Credit Page
🔧 Eligibility Requirements
To qualify:
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Equipment must meet or exceed CEE highest efficiency tier
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Must be installed in your primary residence
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Installed by a qualified contractor
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Not applicable for new builds or rentals
Check your HVAC model ratings against the Consortium for Energy Efficiency (CEE) Directory to confirm eligibility.
🏡 2. The HOMES Rebate Program (State-Run)
Unlike the 25C tax credit, the HOMES rebate is income-based and state-administered, with larger incentives for:
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Low- to moderate-income households
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Whole-home energy savings retrofits
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Electrification upgrades (heat pumps, smart controls, insulation)
💵 Rebates Could Include:
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Up to $8,000 per household for qualifying HVAC and insulation upgrades
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Measured energy savings rebate model or modeled savings path
🧰 Use the Rewiring America IRA Calculator to see what you qualify for based on income and zip code.
📍 Availability Varies by State
As of 2025, some states (like California, New York, and Massachusetts) have already begun implementing HOMES rebate funding. Others are in the rollout phase.
To see your state’s status, check the U.S. Department of Energy’s IRA Program Tracker.
📑 Utility Rebates: An Extra Bonus
Beyond federal programs, many local utilities offer their own rebates for installing:
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ENERGY STAR® certified HVAC systems
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High-efficiency gas furnaces
These rebates typically range from $100 to $1,200, depending on your provider and system type.
🔎 Find Your Utility's Rebates:
Use the DSIRE Database (Database of State Incentives for Renewables and Efficiency) to search incentives by ZIP code.
🧠 Smart Thermostats: Stackable Savings
Installing a smart thermostat alongside your R-32 AC or dual fuel system can earn:
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$50–$150 rebates from your local utility
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Additional savings through demand response programs
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Higher comfort and lower monthly bills
Examples include:
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Honeywell T10
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Nest (requires compatibility settings for dual fuel)
🧠 Check ENERGY STAR’s Smart Thermostat Rebate Guide for current deals and eligibility.
🔍 Qualifying Systems: What to Look For
To get these credits and rebates, your HVAC system should:
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Use R-32 refrigerant or another low-GWP alternative
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Meet SEER2, EER2, and HSPF2 thresholds as published by CEE
Example of eligible system:
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3-Ton R-32 AC + 96% AFUE Gas Furnace
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SEER2: 16+
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Furnace AFUE: 95%+
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Thermostat: Smart-enabled, dual-fuel compatible
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📘 For full specs, consult the CEE HVAC Equipment Directory when evaluating models.
🔧 Documentation You’ll Need
To claim a rebate or credit, be sure to collect:
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Model numbers for each unit installed
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SEER2/EER2/HSPF2 documentation
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Proof of installation (invoice with installer info)
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IRS Form 5695 (for 25C tax credit)
🏡 Store these in your home improvement file—you may need them for warranty or resale documentation as well.
🧠 Savvy Pro Tip
“Energy savings don’t stop at the thermostat. The real win is in how you plan your install and paperwork from the start.”
— Savvy
Take 15 minutes to check your eligibility and rebate options before you purchase, and you could save thousands without lifting a wrench.
🛒 Ready to Upgrade?
At The Furnace Outlet, we stock R-32 AC + gas furnace systems that meet today’s highest efficiency standards—and we’ll help you make sure they qualify for all available incentives.
👉 Browse Eligible R-32 Systems
Need help matching your zip code and household profile to available rebates? Our HVAC specialists are ready to assist.
In the next topic you will read about: Top Maintenance Tips to Extend the Life of Your R-32 System
