Posted on January 22, 2013 · Posted in Articles

If you waited to purchase an energy-efficient HVAC system until the federal tax credit expired, we’ve got great news for you. The 25C tax credit, which had expired on December 31, 2011, has been reinstated and is retroactive to include all of 2012. With this credit, you can get up to $500 from the federal government when you buy a new furnace, boiler, heat pump, hot water heater or air conditioner.

In August of 2012, the Senate Committee on Finance passed a bill that extended the tax credit from January 1, 2012 through December 31, 2013. This credit applies only to residential property installations and gives McKinney, TX, homeowners a wonderful opportunity to save money on high efficiency HVAC upgrades.

This tax credit may become permanent in 2014, but that outcome is uncertain. That’s why it’s important to take advantage of the credit before the end of 2013. If you’re considering an energy-efficient HVAC upgrade, and you want this credit, now is the time to act.

Because the reinstatement is retroactive, it covers all high efficiency HVAC upgrades installed in 2012. If you purchased a  furnace, heat pump or air conditioner in McKinney, TX, last year, you may be eligible for this credit when you file your taxes in April.

What Is The 25C Tax Credit?

This credit is for anyone who completes an energy-saving home improvement before the end of 2013. Energy-saving home improvements include upgrading your air conditioner, heat pump or furnace to a more efficient model. This federal incentive was created to encourage homeowners to reduce consumption of natural resources by upgrading to high efficiency products. An added bonus is that high efficiency products save money on monthly energy bills. If this energy tax credit becomes a mainstay in 2014, home and business owners will continue save on energy efficiency, which in turn helps the U.S. meet its energy efficiency goals.

Which Carrier HVAC Systems Are Eligible for the 25C Tax Credit?

If you upgrade to a qualifying furnace, boiler, heat pump, air conditioner or hot water heater by December 31, 2013, you’ll qualify for the tax credit. However, the system must meet certain efficiency standards. A Carrier split system central air conditioner must have a SEER rating of at least 16 and an EER rating of at least 13. A packaged central AC system must have a SEER rating of at least 14 and an EER rating of at least 12.

Air source heat pumps must have a SEER of at least 15, an EER of at least 12.5, and an HSPF of at least 8.5. Packaged heat pumps must have a SEER of at least 14, an EER of at least 12 and an HSPF of at least 8. Gas furnaces, oil furnaces, gas hot water boilers, oil hot water boilers, propane furnaces and propane hot water boilers must all have an AFUE of at least 95 percent.

How Much Can I Save And For What?

If you are an eligible homeowner and a taxpayer, you can claim 10 percent (up to $500) of the total installation costs of your heating and cooling upgrades. The credit also covers installation costs of other energy efficient improvements such as insulation and hot water equipment. In order to qualify, the upgrades must be installed in your primary residence.

The $500 maximum you can claim for an energy-saving upgrade is also the total amount you can claim. There are caps on individual items. You can claim 10 percent of the costs (up to $300) on air conditioners, hot water heaters and heat pumps.

You can claim 10 percent of the costs (up to $150) on furnaces and hot water boilers. You can claim 10 percent of the costs (up to $50) on a system with a main circulating air fan. To claim the credit for the main circulating air fan, the fan cannot consume more than 2 percent of the total energy output of the furnace.

Each component must qualify on its own. In other words, if the fan qualifies for the credit but the furnace does not, you can claim 10 percent of the fan costs (up to $50), but you can’t claim anything for the furnace.

How Do I Claim The Credit?

Visit the Internal Revenue Service ( for the appropriate forms and instructions. You must include a copy of the Manufacturer’s Certification Statement for every HVAC product you are claiming a credit for, as well as keeping copies of these statements for your records. Manufacturer’s Certification Statements attest to the efficiency ratings of the products you have purchased.

Are There Other Advantages to Upgrading To Energy Efficient HVAC Products?

The 25C tax credit is just one way you’ll save money on energy efficient HVAC upgrades. Depending on the SEER rating of the air conditioner or heat pump you purchase and the AFUE rating of the furnace, you’ll see an immediate reduction on your monthly McKinney, TX utility bills. The higher the SEER or AFUE ratings of your new products, the more efficient the equipment will be and the more money you’ll save.

A new system can also qualify you for other rebates and credits. To learn more about energy-efficient HVAC installations and how much you can save, give us a call at Bill Joplin’s Air Conditioning & Heating. We’ve been helping our McKinney, TX, neighbors to cut costs for over thirty years, and an energy-efficient HVAC upgrade can save enough money over time to pay for itself. With our affordable repayment plans, you can upgrade to a better system, qualify for the federal tax credit and start enjoying lower utility bills right away.

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