
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


Thanks for an excellent job.






If there was a 6th star, he’d be getting it!







Ralph also did a great job with installing water softener and garbage disposal. I believe Rudy also came by and helped.
Juan also did a great job with installing a new kitchen faucet and fixing a leak I had.













Thank you Preston








I appreciated the friendly and knowledgeable service provided by Perter and my new system was installed the next day. The crew that came out was very prfessional and efficient. My home was cool within few hours of the work being completed and detalied instructions were givien to me on how the system works and if I were to have any questions I could call day or night and get the answers needed.
I have recommended your company to a few homeowners I know that are in need of system service and/or repairs. You have gained a customer for as longas I live here in the San Antonio area.




Dylon the plumber came out to check my plumbing. Confirmed my water heater is old enough to be replaced and that some valves are original and are showing some corrosion.
On 7/25 Noe came to my house and confirmed that my A/C needed to be replaced. Austin was able to find a Payment Plan that I qualified for the same day. On 7/26 Christian installed my new A/C unit and a new thermostat. He showed me how to use it and left the manual. Everyone at Goettl was so helpful with this situation and got my A/C replaced and running in just two days!
On 3/9/2024 Jesse came to my house for the heater rejuvenation and to install the Sadie Smart monitor. He was very thorough in explaining how the Smart system works and where he had placed all of the sensors. I had a new filter so he replaced the old one. He also told me that my plan covers filters and I just pay for shipping; I'll remember that when I need a new filter.
On 1/11/25 Jesus came to my house for the annual heater rejuvenation and said my unit is in good shape and running well. I had bought 2 filters before the service in March 2024, one was installed then. Jesus installed the one I had on hand and reminded me that my plan covers filters. He was also thorough in going over the readings he had taken.
On 5/3/25 Michael came to my house for the annual plumbing inspection provided with my Sadie Guard Dog Protection. My water heater is about 7 years old and Michael answered my questions about replacing it. He also told me that Goettl could remove the old one and install new one if I found one more in my budget somewhere else. He even told me the estimated install cost to help with my budgeting.
Andrew came to my house 10/11/2025 for the semi-annual HVAC service under my Sadie Guard Dog Protection. He told me the unit is continuing to function well and needs no repairs.



Professional, knowledgeable and efficient. Very polite and courteous
Also installed surge protectors on the the condensers







Mike was absolutely Top Notch!! He arrived at 9:00 pm in a great mood, then took care of business and left in a great mood..Two thumbs up!!

Also, we are apart of the Smart Sadie Program and just received our yearly plumbing rejuvenation and we had the pleasure of meeting our Tech, “Frank M”. He was so knowledgeable and taught me and my Husband so many things we didn’t know which we value so much as we are new home owners and are just kind of wingin’ it! You can really tell that the Techs and the company genuinely cares about their Clients, and I will be requesting Frank M to service the Plumbing needs within my home from this point on! Frank is the man, and we loved him!(:
So now we have Christian and Daniel for our HVAC maintenance and servicing and Frank M for all our Plumbing Needs! We have an amazing team and I’m sure that other Clients feel the same way about their Techs as well!
Love this Company!


We’ve been Goettl customers for years and have always appreciated their service, but Kevin Edwards truly raised the bar. During his visit yesterday, Kevin showed outstanding attention to detail and technical expertise. He thoroughly inspected every part of our HVAC system, documenting his findings with photos and clearly explaining issues that had gone unnoticed through several previous service visits.
Kevin discovered that our HVAC system had been improperly installed when the home was built—something no other technician had identified. He explained how that flaw had created a chain of problems affecting the furnace, cooling system, and overall efficiency. Because the system uses an outdated refrigerant, repairs weren’t a viable long-term solution, and Kevin guided us toward a responsible upgrade plan.
While no homeowner wants to replace a system after only seven years, we’re grateful Kevin uncovered these hidden issues before they caused a catastrophic failure. His thoroughness, honesty, and professionalism turned a potential headache into peace of mind. Kevin is an exceptional representative of Goettl, and we recommend him without hesitation.

I want to express my complete satisfaction with the work performed by Frank Piusseaux, a technician from Goettl.
For months, several technicians tried to identify the issue with my air conditioning unit, but no one could solve it. However, from the moment Frank arrived, he showed great professionalism and dedication. He took the time to carefully investigate the cause of the problem and determined that the issue was a short circuit in the wiring between the thermostat and the unit.
Thanks to his knowledge and effort, my air conditioning system is now working perfectly.
I truly hope that Goettl recognizes the value of having such a skilled, responsible, and committed employee. Technicians like him make a real difference and deserve special recognition, even a financial incentive, for the value they bring to the company.
Thank you very much, Frank, for your excellent work!





Team Nacho and Brayan installed a 4 ton unit, very professional, very courteous, explained operation as well as answered our questions. Nacho and Brayon cleaned up as if they weren't here. We would certainly utilize their services again.







David and Cesar worked on my water heater and they were all amazing. Great prices and work with me! Will be going to them in the future


-Jesse King






I was very satisfied with the inspection and suggestions.



We also had Kevin M. come out and install our sensors and he was so efficient and explained what he was doing. He even helped me set up the app!



Great service great company. Will definitely be using for future HVAC needs.



Riley(the A/C tech ) did a complete A+++ job. Highly recommended
10/06/21
Excellent service call, Jhun walked me through each step and explained what he was checking and why.
Tony 12/12/22 another great tech. Thanks 2-25-23 New toilet install. Benjamin (tech) did a great job
6-22-23
Minor repair done fast. Tech was very nice and easy to talk to. Thanks Adrian
Sep.29 2023
Jhun Sagum
Excellent tech really knows all areas of his job. AAA+ 4-5-2024. Matt W. Did an exc
David 2025 great job all good stuff above applys.thanks Dave
ellent job ..5star work. Thanks
Corey 4,17,2025 Master of flow 6 star toilet fixer plus. Thanks
10/9/25 Daniel great service very friendly and knowledgeable. Furnace Thanks



Great communication.
Explained everything in detail.
Took before and after pictures.



















He even went as far as calling Lennox to ask about our warranty on the unit. I am very pleased with attention to detail from Jonathan.
Great guy. Great job.



I called Goettl and set up an appointment.
Mike H arrived on time and with his extreme knowledge and experience, he was able to replace the tank and give my system a much needed flush. Mike was so courteous and polite and answered all my questions and gave me advice on the how and why this happened and how to avoid this in the future.
Thank you Goettl and thank you Mike!

Adam was also very good with our situation. When there was a hang up with the loan company, not due to us or Goettl, he quickly found another to accommodate. He went above and beyond. Thx for making our home cool again.











Update: I accepted your proposal and wow, three days later my house has heat and air. Installation time was a little over five hours with breaks, and all the time your crew worked efficiently and professionally. Nothing left undone. A big THANK YOU for you guys.
Update2: Goetti set up the building permit appointment with the county, and attended the inspection, which past with no issues. Other companies that I have dealt with have not done so much. Furthermore, I did get multiple estimates, and all the other companies had convenient add-on's which proved by the inspection were a unnecessary expense, thus making Geotti price the lowest and most honest of them all. By the way, the heater and a/c have work to perfection and are both very quiet


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.




Now we have a new flange, installed correctly, and ready for the new toilet!








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

I definitely recommend Goettl for all your needs.

Nick was helpful, friendly and professional in scheduling the appointment around my commitments.
I have used Goettl for nearly 20 years for my plumbing and HVAC needs. I recommend them as reliable, professional and easy to work with.



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!


Hopefully, we will get Jack for our next service call.







Robert, Tyler, Adrian & Luis, Thank you all so much.
