25C Eligible Systems
What Is the 25C Tax Credit?
The 25C tax credit is a means for the federal government to incentivize energy efficiency by offering tax credits for installing qualifying upgrades in your home. While your specific tax credit can vary, 25C offers as much as $3,200 in a single tax year.
Fast Facts about 25C
Eligibility
25C tax credits apply to your primary residence, not additional properties you don’t live in, like rentals or vacation homes. However, there are tax credits available for certain improvements for second homes.
Also, keep in mind that you’re only eligible for a tax credit if you have tax liability – meaning you owe taxes at the end of the year. If you don’t owe anything, you won’t have money added to your tax refund.
The eligible upgrades include:
Air Conditioning
Central air conditioners are more efficient than window units or portable air conditioners, which is measured in Seasonal Energy Efficiency Ratio (SEER) and Energy Efficiency Ratio (EER). The SEER rating measures the efficiency of a system over the entire cooling season, while EER rating measures the efficiency at a specific temperature and humidity level. The higher the SEER and EER rating, the higher the energy efficiency of the unit.
New central air conditioning systems may be eligible for up to 30% of the project cost (up to $600 maximum) with the following guidelines:
- 30 % of the project cost up to $600 maximum
- Split systems must be ENERGY STAR® certified with SEER2≥ 16
- Packaged systems must be ENERGY STAR® certified with SEER2 ≥ 15.2, EER2 ≥ 11.5
Heat Pump
Heat pumps are a leading way to heat and cool your home more efficiently. Instead of burning fuel to generate heat, heat pumps transfer heat energy in either direction to provide cooling or heating in all seasons.
Appliances like heat pumps are ranked according to CEE tiers. Higher tiers represent higher levels of efficiency. Air source heat pump efficiency is measured in Heating Seasonal Performance Factor (HSPF), which is the heat output divided by the electricity used over the heating season (BTUs per watt-hour).
Electric or natural gas heat pumps may be eligible for up to $2,000, but they must meet the highest efficiency standards available at the time you claim the credit. This typically means ENERGY STAR® appliances with CEE tiers of 1, 2, or 3.
- Air source heat pumps have additional requirements:
- 30% of the project cost, up to $2,000 maximum
- Ducted split systems must be ENERGY STAR® certified with HSPF ≥ 7.8, SEER2 ≥ 15.2, EER2 ≥11.7
- Packaged systems must be ENERGY STAR® certified with SEER2 ≥ 15.2, EER2 ≥ 11.5
- Ductless mini-split (non-ducted) systems must be ENERGY STAR® certified with SEER2 ≥ 16, EER2 ≥ 12, HSPF2 ≥9
Insulation and Air Sealing
Insulation and air sealing, otherwise known as weatherization, prevent heating and cooling loss from leaks. You may be able to claim credit for weatherization materials like:
- Insulation batts
- Blow-in insulation fibers
- Rolls of insulation
- Expanding spray foam insulation
- Rigid boards of insulation
- Foam-in-place insulation
- Specialized caulk, tape, foam, and sealants
All weatherization supplies must meet the Department of Energy’s recommended R-values for your climate zone to qualify for a tax credit.
Water Heaters
To qualify for a tax credit, all weatherization supplies must meet the Department of Energy’s recommended R-values for your climate zone. Heat pump water heaters also qualify for an increased annual credit limit of $2,000.
3C-REN (CA Only)
The 3C-REN Single Family Program offers incentives for residents of the Tri-County Region of Ventura, Santa Barbara, and San Luis Obispo counties. Homeowners can save money and improve their homes with energy-efficient upgrades ranging from $500 to $5,000 per project.
To qualify for 3C-REN, you must:
- Own a residential home or mobile home
- Have 12 months of energy history
- Electric or gas as a current heating source (propane heating sources are not eligible)
- Submit your application within 30 days of the install date
The eligible appliance upgrades include
- Heat pumps: Average rebate size of $6,300
- HPWH: Average rebate size of $2,300
- Insulation: Average rebate size of $500