You may be eligible for energy efficiency tax credits if you purchase a qualifying air conditioner or furnace. To qualify, the unit must meet certain energy-efficiency standards set by the U.S. Department of Energy (DOE).
To find out if your AC or furnace qualifies for energy efficiency credits, ask the salesperson or manufacturer at the time of purchase or installation. You can also check the DOE’s website for a list of qualifying models.
If you do purchase a qualifying unit, be sure to keep your sales receipt and manufacturer’s certification statement. You’ll need these documents when you file your taxes. So if you’re thinking about purchasing a new AC or furnace, it may pay to do some research ahead of time to see if you could qualify for energy efficiency tax credits. Who knows? You might be able to save yourself some money come tax time!
How to Know If Your AC or Furnace Is Eligible for Energy Efficiency Tax Credits
Energy efficiency tax credits are available for both homeowners and businesses. The credit amount varies depending on the type of equipment installed, but the maximum credit is $300 for air conditioners and $150 for furnaces.
In general, to qualify for an energy efficiency tax credit, your air conditioner or furnace must:
- Be ENERGY STAR® certified.
- Have a SEER rating of 13 or higher (for air conditioners) or an AFUE rating of 90 or higher (for furnaces.)
- Be installed in your primary residence.
For more information on energy efficiency tax credits, visit the DOE’s website or speak with a tax professional. Qualifying models may change from year to year, so check for updates before making your purchase.
State-Level Energy-Efficiency Tax Credits
In addition to the federal tax credits, some states offer their own energy-efficiency tax incentives. These programs vary widely, so be sure to check with your state’s tax authority for more information.
For example, California promotes a Home Performance Package that includes up to $3,000 for ACs and furnaces. Each state has specific policies and incentives for energy-efficient appliances.
In addition to residential energy-efficiency tax credits, businesses may also be eligible for tax breaks on certain energy-efficient equipment purchases. The credit amount and qualifying criteria vary depending on the type of equipment installed.
What Makes an AC or Furnace Model Energy-Efficient?
Energy efficiency can be determined by several factors when it comes to different types of equipment. Standards are set by the U.S. Department of Energy (DOE) for both furnaces and air conditioners.
The two main factors that affect an AC or furnace’s energy efficiency are its SEER rating (for air conditioners) and AFUE rating (for furnaces). Energy-efficient AC and furnace models typically have SEER and AFUE ratings that are higher than the minimum standards set by the DOE.
However, keep in mind that these ratings are only a guide. Other factors, such as the size of your home and the climate you live in, can also affect your energy usage.
SEER, or seasonal energy efficiency ratio, is a measure of how much cooling a unit can provide per unit of energy used. The higher the SEER rating, the more energy-efficient the unit. The DOE standard for SEER rating is 13 for air conditioners.
AFUE, or annual fuel utilization efficiency, is a measure of how much heat a furnace can generate per unit of fuel used. The higher the AFUE rating, the more energy-efficient the unit. The DOE standard for AFUE rating is 78 percent for furnaces.
When shopping for a new AC or furnace, be sure to compare models based on both their SEER and AFUE ratings. To qualify for a tax credit, the unit must meet or exceed the minimum efficiency standards set by the DOE.
How to Claim Your Energy Efficiency Tax Credit
If your AC or furnace unit meets or exceeds the standards set by the DOE, you may be eligible for a tax credit. If you purchase a qualifying air conditioner or furnace, you may be eligible for a tax credit of up to $300.
To claim your energy efficiency tax credit, you’ll need to file IRS Form 5695 with your tax return. This form can be found on the IRS website. Be sure to keep your sales receipt and manufacturer’s certification statement to submit with the form.
If you have any questions about whether or not your AC or furnace qualifies for an energy efficiency tax credit, speak with a tax professional or salesperson.
When claiming the credit, you’ll need to provide the following information:
- The make and model of the unit
- The date of purchase
- The cost of the unit
- The manufacturer’s certification statement
You can claim a tax credit for both the purchase and installation of an energy-efficient AC or furnace. However, the total amount of the credit cannot exceed $300 for air conditioners or $150 for furnaces.
Energy efficiency tax credits can help offset the cost of purchasing a new air conditioner or furnace. To qualify for the credit, the unit must meet certain energy-efficiency standards set by the U.S. Department of Energy. Be sure to ask about tax credits at the time of purchase, and keep your sales receipt and manufacturer’s certification statement handy come tax time.