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What You Need To Know About The Federal Tax Credit Extension For Energy Efficient HVAC

Posted by Kelly on Mar 8, 2016 3:30:00 PM


There is good news for those of you who’ve wanted to make some energy efficient updates to your home, but still haven’t made the leap. The federal tax credit has been extended. Originally set to expire at the end of 2014, the 25C federal tax credit – which applies to energy efficiency improvements in existing homes or for the purchase of high-efficiency heating, cooling and water-heating equipment – will now run through the end of 2016. Here are some things you need to know about the extension.

  • Although the tax credit was set to end in 2014, it has now been renewed and extended until Dec. 31, 2016.
  • According to, the tax credit covers 10 percent of the cost, up to $500, or a specific amount from $50-$300. 
  • The cap is $500. As in previous years, the cumulative maximum amount of tax credit that can be claimed by a taxpayer in all years combined is $500.
  • If you already claimed the credit in years past, you are not eligible to claim it again.
  • It will only apply to improvements made to an existing home that you currently live in. It does not apply to new construction or rentals.
  • This credit applies towards:
    • HVACs (heating, venting, air conditioning) – including central air conditioning units; advanced main air circulating fan; air source heat pump; gas, propane or oil hot water boiler; natural gas, propane, or oil furnace.
    • Biomass Stoves
    • Insulation
    • Roofs (Metal, Asphalt)
    • Water Heaters (non-solar)
    • Windows and Doors

Geothermal, solar, and fuel cell tax credits are different. They fall under a separate bill and have different rules and expirations. For example, the tax credits for geothermal, small residential wind turbines, solar energy systems, and fuel cells cover 30 percent of the cost with no limit.

Right now, the credit for all of those, excluding solar, go through Dec. 31, 2016. The credit for solar energy is available at 30 percent through Dec. 31, 2019, then decreases to 26% in 2020, and 22% in 2021, and finally expires at the end of 2021. Details for those credits can also be found on the Energy Star website.

If you have further questions about the tax credit extension or want help finding products that qualify, call your local HVAC specialists at



Topics: Energy Efficiency