Energy Efficient Home Improvement Credit
The Energy Efficient Home Improvement Credit (Section 25C), part of the Inflation Reduction Act of 2022, provides tax credits for qualifying heat pumps, ductless units, and air conditioners installed in a primary U.S. residence. The credit is available through December 31, 2025, and has annual limits.
Your Questions, Answered
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The credit amount is 30% of the total cost (purchase and installation) for qualifying improvements.
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Heat Pumps (including ductless mini-splits): Up to a $2,000 annual credit.
Central Air Conditioners: Up to a $600 annual credit.
Total Annual Limit: A combined total annual limit of $3,200 for all eligible home improvements (which can include other items like insulation, doors, or electrical panel upgrades).
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The equipment must be new and installed in an existing home that is your primary residence. New construction does not qualify.
The equipment must meet specific energy efficiency standards, generally the highest efficiency tier established by the Consortium for Energy Efficiency (CEE), or be recognized as ENERGY STAR Most Efficient for 2025 installations.
You must have sufficient tax liability to receive the credit, as it is non-refundable.
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To claim the credit, you must complete and file IRS Form 5695, Residential Energy Credits, with your federal income tax return for the year the system was fully installed and operational. You will complete Part II of this form.
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You need to keep the following documentation for your records:
Receipts and invoices showing the cost of the equipment and installation.
The IRS requires a specific Qualified Manufacturer Identification Number (QMID or QM code) for equipment installed in 2025. Below are the codes for the requested manufacturers:
Carrier: E8X7
Trane/Mitsubishi: B8T9
Daikin: I7Q6
Always verify the specific model you purchased qualifies by checking the manufacturer's certificate or searching the AHRI Directory, and consulting with your tax advisor.