What HVAC Systems Qualify for Tax Credits in 2021?

If you’re looking to upgrade your HVAC system and want to take advantage of any available tax credits, you’ll want to read this blog post. We’ll outline what type of HVAC systems qualify for tax credits in 2021, so you can make the most informed decision for your home or business.

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The US government offers a range of tax credits and other incentives to encourage homeowners and businesses to invest in energy-efficient equipment and appliances. This includes HVAC systems, which can help you save money on your energy bills while also reducing your impact on the environment.

In order to qualify for a tax credit, your HVAC system must meet certain efficiency standards. The specific standards will vary depending on the type of equipment you are installing, as well as the year it was manufactured.

Here is a general overview of the different types of HVAC systems that may qualify for a tax credit in 2021:

· Air source heat pumps: These must have an annual fuel utilization efficiency (AFUE) rating of at least 15.0%.

· Central air conditioners: These must have a SEER rating of at least 16.0.

· Natural gas, propane, or oil furnaces: These must have an AFUE rating of at least 95%.

· biomass stoves: These must have a thermal efficiency rating of at least 75%.

Types of HVAC Systems That Qualify

There are a few types of HVAC systems that qualify for tax credits in 2021. If you are thinking about upgrading your HVAC system, you may be able to get a tax credit. The types of HVAC systems that qualify for tax credits are geothermal heat pumps, air-source heat pumps, and solar-powered water heaters.

Central Air Conditioners

Homeowners looking to upgrade their HVAC system may be able to take advantage of a tax credit by doing so. The Consolidated Appropriations Act, 2021 extended the Non-business Energy Property Credit through December 31, 2025. The credit applies to qualifying central air conditioners, furnaces, boilers, and heat pumps installed in a primary residence or second home located in the United States. The credit is worth up to $300 for each appliance installed.

To claim the credit, taxpayers must file form 5695 with their federal income tax return. The instructions for the form can be found on the IRS website.

Air-Source Heat Pumps

If you’re in the market for a new heating and cooling system, you might be wondering if any of the newer, more efficient systems will qualify you for a tax credit. The answer is yes! In fact, there are quite a few different types of HVAC systems that can help you save on your taxes.

Air-source heat pumps are one type of system that can qualify for a tax credit. These systems use the air outside to heat and cool your home, and are therefore much more efficient than traditional HVAC systems. If you’re looking for an air-source heat pump that will qualify for the tax credit, be sure to choose one that has an Energy Efficiency Rating (EER) of 14.5 or higher.

Other types of HVAC systems that can qualify for the tax credit include:
-Geothermal heat pumps
-Solar water heaters
-Wood stoves

Gas, Propane, and Oil Furnaces

You may be eligible for a tax credit of up to $150 if you install a qualifying energy-efficient gas, propane, or oil furnace (or boiler) as your primary heating system. To qualify, the furnace (or boiler) must meet or exceed the 95 percent annual fuel utilization efficiency (AFUE) standard set by the U.S. Department of Energy.

How to Claim the Tax Credit

If you’ve recently upgraded your HVAC system, you may be wondering if you qualify for a tax credit. Good news – there are a few different scenarios in which you might be eligible for a tax credit on your new HVAC system. In this article, we’ll go over what HVAC systems qualify for tax credits in 2021 and how to claim the tax credit.

Documentation You’ll Need

To receive the tax credit, you must have a manufacturer’s Certificate of Compliance. This document must state that the equipment meets the requirements for the tax credit and must be available for your tax preparer or the IRS to inspect, if necessary. You should keep this certificate with your other important tax documents.

You may also need a copy of your sales receipt, canceled check or other payment records, and records of any energy-efficiency improvements you made to your home. These records can help you prove to the IRS that you purchased qualifying equipment.

Applying for the Tax Credit

After you’ve installed a qualifying system in your home, you’ll need to file for the tax credit. To do so, you’ll need to complete and submit IRS Form 5695 with your tax return for the year in which you made the purchase.

Be sure to keep all records of your purchase, including receipts, invoices, and Manufacturer’s Certification Statements. These will be required in order to prove that you purchased a qualifying system and are therefore eligible for the tax credit.


The preceding information should help you understand what HVAC systems qualify for tax credits in 2021. While there are a few different options available, the most efficient and cost-effective way to improve your home’s energy efficiency is to upgrade to a newer, more energy-efficient system. Not only will this improve your home’s comfort and indoor air quality, but you’ll also see significant savings on your utility bills. If you’re thinking about upgrading your HVAC system, be sure to check with your local tax authorities to see if you qualify for any rebates or tax credits.

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