
Federal Tax Credits and Rebates for Home Upgrades: Everything You Need to Know
If you upgrade your home’s heating and cooling appliances without knowing the available tax credits, you leave money on the table. The recent Inflation Reduction Act of 2022 (IRA) provides several credits from the federal government to reduce your tax bill for eligible upgrades.
Learn about the IRA and other tax credits and incentives for home improvements, how they can save you money at tax filing time, and how to determine your eligibility.
Understanding the Inflation Reduction Act
President Biden signed the Inflation Reduction Act in 2022, encompassing legislation that reduced prescription drug prices, extended some of the Affordable Care Act, and implemented funding for climate initiatives, including tax credits and rebates for homeowners.
The IRA includes specific tax credits and rebates for homeowners who install new HVAC systems or upgrade their current systems, such as heat pumps. However, there are eligibility requirements and limits.
25C Energy Efficient Home Improvement Credit
The 25C Energy Efficient Home Improvement Credit offers tax credits for qualified energy-efficient improvements to your home. Starting January 1, 2023, homeowners may qualify for a tax credit of up to $3,200 for upgrades made through December 31, 2032.
25C can equal up to 30% of certain eligible expenses, including:
- Qualified energy efficiency improvements installed during the year
- Residential energy property expenses
- Home energy audits
However, the allowable annual credit and the credit for certain types of qualified expenses have limits, which can be confusing.
There’s a maximum allowable credit for each year:
- $1,200 for energy property costs and specific energy-efficient home improvements with a limit of $250 per door, $600 for whole-house window installations, and $150 for energy audits.
- $2,000 annually for qualified heat pumps and biomass stoves, boilers, and ENERGY STAR® air conditioners.
While there are limitations, you can claim the maximum annual credit each year that you’ve made eligible improvements through the end of the 2032 tax year. The credit resets yearly, so you can use it repeatedly for qualifying energy upgrades.
Note that this is a tax credit, which means it’s an amount you can subtract from your tax liability (the taxes you owe). A tax credit only applies if you owe taxes at the end of the year. It’s not a deduction or a refund. You can’t apply the extra amount to a future tax year if there’s a higher credit than your tax liability.
Which Upgrades Are Eligible?
To be eligible, you must be a taxpayer living in a home or apartment and purchase or install the upgrades. The credit only applies to upgrades on existing primary homes, not secondary properties—like rentals—or new construction.
So, if you’re a landlord, you can’t make energy-efficient upgrades to your vacation home or rental properties and take the tax credit. However, different tax credits may apply to upgrades for second homes.
Eligible appliance upgrades include:
- Insulation and air sealing (weatherization): This includes the supplies used to insulate and seal your home against air leaks, such as insulation bats, expanding spray foam insulation, and sealants. According to the Department of Energy, weatherization upgrades have to meet the recommended R-values for your climate zone to be eligible for the upgrade.
- Energy-efficient windows and doors: You can replace your exterior doors and windows with ENERGY STAR® certified doors and windows, but there are limits. You can spend up to $600 of the credit on windows, $500 on doors, and no more than $250 on one door.
- Heating, cooling, and water heating systems: Central air conditioning, heat pumps, and heat pump water heaters (HPWHs) may also be included. Gas, propane, or oil furnaces and water boilers may also be included.
- Energy audits: Energy audits are assessments that determine where you’re losing energy and how to optimize your home for maximum energy efficiency with tailored solutions. This is an important step in determining the best way to maximize your spending on upgrades, and you can apply $150 of your credit toward a professional audit.
Remember to upgrade HVAC appliances that meet the highest energy efficiency standards, which generally means ENERGY STAR® certified appliances.
How to Apply for 25C Tax Credit
Getting a 25C properly credited to your taxes can be complicated, so working with a tax professional is best. The general process includes:
- Install qualifying upgrades to your home.
- Keep your receipts and documentation for the upgrades. Include what you purchased and installed, who installed it, and how much it cost. Retain copies for your records.
- Tell your tax professional you plan to use the 25C tax credit. This can help you plan your tax filing.
25C tax credits are filed using IRS Form 5695.
Rebate Programs
Tax credits like 25C require taxes owed for homeowners to cash in, but it doesn’t matter if you owe or get a refund to take advantage of tax rebates. Here are some rebate programs for homeowner energy-efficiency upgrades:
Home Energy Performance-Based, Whole House Rebate (HOMES) Rebate Program
The Home Energy Performance-Based, Whole House Rebate (HOMES) Rebate program is intended to help homeowners save on energy bills with point-of-sale rebates for eligible home weatherization and electrification improvements. Some eligible rebates include air sealing, insulation, heat pump HVAC systems, and HPWHs, which you’ll receive when you purchase.
For example, a qualifying rebate would replace a dated HVAC system with a mini-split heat pump system. Homeowners can claim up to $2,000—or 30% of the cost—toward purchasing and installing the heat pump and any necessary electrical upgrades.
State-based programs under HOMES offer low- and moderate-income households rebates of up to $8,000 on heat pump installation and $4,000 on electrical upgrades.
Home Electrification and Appliance Rebate (HEAR)
The Home Electrification and Appliance Rebate (HEAR) incentive program is a $4.3 billion program part of IRA that assists homeowners with rebates at the time of sale, not with a mail-in rebate or a rebate at tax time. Instead, the rebate is applied at purchase, offering $8,000 to lower the purchase price for heat pumps used for home heating and cooling.
In addition to heat pumps, heat pump HVAC systems, and HPWHs, the program may include qualified electrification programs like electric stoves and cooktops, air sealing and insulation, wiring and ventilation, and some purchase and installation costs.
Like HOMES, HEAR is intended for low—to moderate-income homeowners. If your income falls below 80% of the median income in your area, the program may cover up to 100% of the electrification costs. If your income falls between 80% and 150% of your area’s median income, you may receive up to 50% of the costs. Both programs are capped at $14,000.
HOMES and HEAR can vary based on household income, the type of upgrade and its efficiency, and your state’s rules and requirements. The specifics are up to each state and may be first come, first serve, or random, so it’s best to plan early to get your rebates when the programs are implemented in your state.
How to Maximize Your Tax Credit
Though it flew under the radar, the IRA and 25C tax credits and the energy-efficiency rebates greatly expanded the benefits for eligible homeowners. The credits and rebates do have qualifying appliances and limits, so it’s best to plan your upgrades to ensure you get the most out of them.
- Make sure your home is airtight. Air leaks and damaged insulation are responsible for up to 45% of energy waste in your home. There’s little point in upgrading to a new energy-efficient HVAC system if you only lose your heated or cooled air from leaks.
- Upgrade your HVAC to an energy-efficient heat pump. These systems are far more energy-efficient than conventional ones and can replace heating and air conditioning in one unit. Heat pumps also dehumidify and filter your home and work with existing ductwork. If you prefer ductless, heat pumps can provide zoned heating for more personalized comfort. Heat pumps can have high upfront costs, but with the available tax credit, now is the time to upgrade.
- Look into state incentives and rebates. IRA is a federal program, but individual states may offer additional incentives and rebates that you can combine with federal incentives. Consider your options and plan your upgrade strategy with a tax professional and an HVAC professional to maximize the savings.
Upgrade Your Home with Energy-Efficient Appliances for Energy and Tax Savings
With sweeping legislation like the IRA and 25C tax credit, now’s the time to upgrade your home’s appliances to enjoy a tax break and long-lasting energy efficiency savings.
Are you unsure what’s best for you? Goettl Air Conditioning can help! Contact us to discuss your home’s energy-efficient upgrades!
The factual information regarding IRA 25C and 3C-REN programs is for educational purposes only. Consult with a tax professional for personalized advice regarding your eligibility and incentives. Goettl is not responsible for the rebate amount customers may receive.
Testimonials
What Our Customers Say About Us


Original order of checking thermostat. And why heat would not kick on right away
It was taking several degrees to heat up the house. Air conditioning works great.
He went and checked thermostat and suggested a new thermostat. $800 for two installed. 👀
He then checked furnace in attic.
The fresh air exchanger was pretty dusty and he could clean it for under a hundred $. I said go ahead because exchanger runs ten minutes per hour to keep fresh air circulating. So price was $99. Still a lot for cleaning a screen.
It seemed to have worked in conjunction with thermostat because it’s been working properly since he left.
Im glad I didn’t spend $800. But only $228 .
Hope thermostat continues to work well
Thank you Jackie.
I still think prices are very high. You can buy and install a thermostat yourself for $175. With a $75 rebate. That’s quite a difference.


I also want to add that Taylor came to service my unit and she was amazing. My dog is usually sketched by most people and she liked Taylor. That's a huge plus.









Thank you Ian for my maintenance today!
March 2, 2024
Thank you Aaron for my garbage disposal! A big shout out to Mark and Ricky in dispatch for coming through and getting this done in a timely fashion to ensure I was prepared for my company coming to dinner. I love goettl and their service! Proud to be part of club Sadie!
March 2025
Always return back to Goettl because of how well they take of me! Thanks to Judd for installing my new toilet and to Marc for my AC maintenance!
November 2025
Thank you to Gerardo for educating me on hot water heater flushing! Lol. I always appreciate geottl for their customer service and knowledgeable techs!







Not Plumbing
Goerttl made repair experience not so painful
Support Military
Andrew is an outstanding representative of the company.
Thanks

We had Edgar come out to inspect our new home today and he did a very thorough inspection. He made sure the unit was checked so when the warranty company comes out we have all information possible. Amazing customer service and very personable
Edgar came back after a warranty inspection was done on the home by the install company. He found errors and was amazing at documentation of the issues. If I could give more than 5 stars I would.
Peter and Josue came out today to do an additional check on our unit with humidity issues. The weather was not conducive to having the outdoor pressures checked and they were very thorough with an interior check. Very professional and knowledgeable.









I would also like to thank Josh for his assistance in the process. He helped us find ways to save money on the additional work that needed to be done. His calm demeanor not only added a professional touch but also helped us heal from the prior experience with the other HVAC company. Thank you, Josh and Jorge, for helping us make the right decision. Jeremy is the bum digidy in a good way.


























I think the guy that was supposed to be assigned to me had problems. My appointment was from 9-1 and Austin was assigned to me at 1:30 and Drove over an hour to get to me.
Now that's 💜
11/24/25 Seems this is an update not its own post. Adam was out to repair our filtration system. No muss no fuss and it was fixed. Awesomely competent guy







Job done quickly and efficiently. Thank you


March 2025 - Jesus Gloria came out in an instant to help us out and quickly fixed our problems. Give this man a promotion!
February 2025 - Our unit was working properly with the cold weather, but Michael showed up and had it fixed in no time! He was also nice enough to give my son a stuffed animal and flashlight. Great service.
September 2024 - Johnny Rivera and Billy Solis came by to fix some work for me and did a fantastic job. Give these guys a raise!




A special shout-out goes to Pablo, our technician. He was on time, friendly, and extremely knowledgeable. Pablo took the time to explain everything he was checking, walked me through the condition of each component, and gave helpful tips on how to keep our system running efficiently year-round. His attention to detail and pride in his work really stood out. Because of his professionalism and the overall quality of service, Goettl has definitely earned my trust and future business.
Highly recommend Goettl HVAC—and if you can, ask for Pablo!

Veronica and Kdyn did a great job cleaning our ducts too!

I have seen Goettl vans all over town and so I called them.
Got appointment right away and the Technician, Jef Eusepi, took care of our problem.



Call Goettl and was able to get us on the schedule due to a cancellation they had.
Jef Eusepi our tech was fantastic.
He explained everything and showed us pictures of what he was doing and fixing.
Would definitely recommend this Company and Jef.

He was knowledgeable and friendly and was able to flush the tank and get my hot water flowing again. Thanks again...





(Oldest)Jared was great. Got here promptly and fixed it quickly. Lifesaver on a 100+ degree day!

















On time, clean, and very thorough with any potential issues.
Thank you.







Chris R came out for our Sadie Membership inspection and review before the cold comes here in TX. He did a fantastic job and really knows his stuff. Thank You!








Mike provided truly exceptional service. From the moment he arrived, it was clear he was extremely knowledgeable; he quickly and confidently diagnosed a very tricky issue that we had with our pipes, explaining everything clearly and answering all of our questions with patience. He also installed our new water heater and did an outstanding job. If you need a plumber who gets the job done right the first time, we highly recommend Mike. Thank you!






The Goettl team has been very professional and helpful to me as their customer. Thank you, Kelli Stoika.
PS… If there would’ve been 6 stars on the scale, that’s what I believe they should’ve received.



Sally



UPDATE Julian and his team, Nick & Jeffery, were here to fix my sewer pipe. They explained everything thoroughly and kept me apprised of their progress. When they finished, it looked as if they hadn’t been here even though they dug a giant whole in my yard! Most impressive! I highly recommend Goettl.
UPDATE November 14, 2025
Goettl continues to be a 5-star company for me. Always, on time, clear explanations, fair pricing, respectful of property and competent, friendly staff. Caelin was my team member today and upheld all of these values.





Thank you,
Greg Sanches





















This past week our service technician was Andrew Morgan and he is such a friendly, knowledgeable, and skilled technician. He spent time making sure the job was done correctly and he explained it in terms that I could understand. Not only is our unit functioning even better than before, I also gained knowledge of how the system works.













I highly recommend Goettl as this is the second time l've used them in less than a year. (2 seperate issues)... and I highly recommend them..anytime and anyday.
They have exceeded to top any expectations I could have ever had with any company.


Jerry also noticed our water pressure was low after flushing toilet then trying to wash hands in bathroom sink which were so he suggested a new pressure regulator as we have had a new better water conditioning system installed. We now have the best water pressure even when using a shower and kitchen sink faucet at the same time. Also Jerry is a master plumber and we appreciate his knowledge and experience. Will definitely call Goettl again when a plumber is needed.
Ralph & Kathy Lesmeister



Darean Guerra today. He arrived on time and took the time to explain what he was going to do. He was very knowledgeable which helped me trust what he was doing. He left his work area clean. I am very pleased with his work.









The company is installing a tankless heater and the customer service is outstanding.
I recommend Geottl to all!


They made sure my carpet was covered and when they were all through they cleaned up perfectly
I would recommend your company to anyone looking to put in a new air conditioner.
Thank you so much for all you did for me.
Sincerely, June Jones

And I would highly recommend the company and the quality technicians like Jarod.
Jarod is the go to if you want excellent
Customer service and communication for any AC related issues. He is very knowledgeable, personable and trustworthy. I am grateful and satisfied.







They listened to my issue, were very through, checked for leaks, etc. I’ve lived in Lakeway for 30 years, used MANY local plumbers - but Goettl will definitely get all my business moving forward. HIGHLY recommend!
Ty, Wil & Adrian!

Everyone from the Goettl sales representative Christian, Tech / Advisor Josias recommended a HVAC A/C and Heating system replacement. Technicians team Veronica and her partner.


Jeremy Canchola serviced our mini-split today with the usual Goettl efficiency and professionalism.
Highly recommended!





