How to Claim an HVAC Tax Credit on Your 2025 Return

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If you upgraded your HVAC system in 2025, you could be eligible for up to $3,200 in federal tax credits. That’s real money back in your pocket—but only if you file correctly.

The good news? Claiming your credit is easier than it sounds. All it takes is a qualified system, the right documents, and a few extra minutes with IRS Form 5695. In this guide, I’ll walk you through the process step by step, so you don’t leave any savings on the table.

First—Make Sure You Qualify

Before we jump into the paperwork, let’s confirm your system is eligible. The IRS has a few clear rules for what qualifies under the Energy Efficient Home Improvement Credit (Section 25C).

✅ You’re eligible if:

The upgrade was installed in your primary U.S. residence
The equipment was placed in service in 2025 (not just purchased)
The system meets or exceeds ENERGY STAR® efficiency standards
You have proper documentation (more on that shortly)

🛠️ Covered HVAC equipment includes:

Air-source heat pumps
High-efficiency central air conditioners
Natural gas, propane, or oil furnaces and boilers
Heat pump water heaters
Smart thermostats (partial credit)

📎 Not sure if your system qualifies? Double-check the requirements here:
👉 2025 HVAC Tax Credits & Rebates Explained

What You Can Claim in 2025 (Credit Breakdown)

The updated 25C tax credit allows homeowners to claim 30% of qualified HVAC expenses, up to certain annual limits:

Upgrade Type	Maximum Credit	Notes
Air-source Heat Pumps	$2,000	Must be ENERGY STAR certified
Central AC, Furnace, Boiler	$600	Per category, per year
Smart Thermostats	$150	Must meet connected requirements
Total Annual Cap	$3,200	Per household, per year

ENERGY STAR maintains a full list of eligible HVAC equipment and model-level details.

💡 Bonus: Labor costs do count toward the credit—as long as they relate directly to the installation of qualifying systems.

Documents You’ll Need to Claim Your Tax Credit

The IRS won’t give you a tax credit just for saying you installed a heat pump. You’ll need proof. Here’s what to gather:

🧾 Required Documentation:

AHRI Certificate of Product Rating
Confirms your equipment meets SEER2/HSPF2/AFUE requirements.
Search your unit here.
Itemized Invoice from Licensed Installer
Must include product model numbers, serial numbers, labor breakdown, and installation date.
Model & Serial Numbers
Needed for AHRI lookup and rebate validation.
IRS Form 5695
This is the form you'll use to file the credit. Download it here with official instructions.

💬 Keep all paperwork for at least 3 years in case of an audit or rebate cross-check.

Step-by-Step: How to Fill Out IRS Form 5695 (2025)

Filing doesn’t require a tax pro—but it does require careful attention to details. Let’s walk through the steps.

Step 1: Download and Review IRS Form 5695

Start by visiting the IRS Form 5695 page and downloading both the form and the instructions PDF. You’ll be filling out Part II – Energy Efficient Home Improvement Credit.

Step 2: Enter Your HVAC Costs

In the section for HVAC upgrades:

Enter your total qualified costs (equipment + installation)
Calculate 30% of that total
Don’t exceed $2,000 for heat pumps or $600 for other HVAC categories

If you installed more than one system, list each separately.

Step 3: Apply the Credit to Your Tax Return

Transfer the final credit amount to Schedule 3 of Form 1040
Attach Form 5695 to your return
File electronically or with your tax preparer as usual

📝 Reminder: This is a non-refundable credit. That means it only reduces the tax you owe—you won’t receive a check if your tax bill is already zero.

Common Mistakes to Avoid When Filing

Even a small slip can delay or disqualify your credit. Here are some of the most common HVAC filing mistakes I’ve seen:

⚠️ Filing without documentation

Always keep copies of your invoice and AHRI certificate. If the IRS requests verification, you’ll need them.

⚠️ Claiming for an unqualified system

Not all systems—even new ones—meet ENERGY STAR or CEE efficiency thresholds. Verify before you buy.

⚠️ Missing the install year

The system must be installed (not just purchased) between January 1 and December 31, 2025.

⚠️ Filing the wrong year’s form

Use the 2025 version of Form 5695—not an older one. Instructions change each year.

💡 Bonus: Can You Claim a Rebate and a Tax Credit?

Yes! In most cases, you can combine:

Federal tax credits (like this one)
Utility rebates
State-level rebates and programs like HEEHRA

Just don’t double-dip on the same expense. If a rebate covered $1,500 of your install cost, subtract that amount before calculating your 30% tax credit.

📎 Want to see which HVAC upgrades qualify for both tax credits and rebates? That’s covered in our next article:
👉 HVAC Upgrades That Qualify for Both Tax Credits and Rebates

💬 Final Thoughts from Alex Lane

Filing for your 2025 HVAC tax credit doesn’t have to be a headache. With the right documents and a few extra steps, you can claim up to $3,200 in credits for improving your home’s energy efficiency.

Here’s the plan: