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Energy Tax Credits for 2023

CM Heating - Energy Tax Credits for 2023

When it comes to upgrading heating and cooling equipment, most people approach this essential task with a sense of dread. After all, few of us enjoy having to cash out hundreds, if not thousands of dollars on expensive appliances like air conditioners and heaters. Luckily, with the help of the newly-introduced federal tax credits, these costs have gotten a bit easier to manage. 

Understanding the Inflation Reduction Act

The current inflation has many people struggling like never before. The U.S. Government recognized this problem and implemented the Inflation Reduction Act of 2022 to attempt to slow down the rate of inflation. This new law contains a series of credits and deductions taxpayers are allowed to claim on their taxes when they upgrade to energy-efficient cars, air conditioners, heaters, and other products that normally have a high emission rate. Below, we will explore some of the credits and rebates designated specifically for the HVAC industry. 

Tax Section 25C: Residential Property Credit

One of the first tax credits that many homeowners are quick to get excited about is the residential property credit, Tax Section 25C. This credit provides up to 30% off installation costs on taxes with the total amount depending on the region of the country they reside in, and if the HVAC product they install meets the requirements for high-efficiency tier metrics. Any HVAC product must also be ENERGY STAR certified. Since CM Heating does business in the state of Washington, we will provide you with the requirements you must meet when residing in the Northern portions of the country. 

Air Conditioners

Your new air conditioning system must meet the following criteria to qualify for a $600 tax credit:

  • Split Air Conditioning
    • Nationally: SEER 2 ≥16, EER2 ≥12, 
  • Packaged Air Conditioning
    • Nationally: SEER 2 ≥15.2, EER2 ≥11.5


Purchases of gas-fired forced air furnaces that are rated at 97% AFUE qualify for a $600 tax credit in 2023.

Heat Pumps

A tax credit of $2,000 is available for those purchasing heat pumps as long as they meet the following criteria: 

  • Split Ducted Heat Pump
    • North: SEER2 ≥15.2, EER2 ≥10, HSPF 2 ≥ 8.1
    • South: SEER2 ≥15.2, EER2 ≥11.7, HSPF 2 ≥ 7.8
  • Non-Ducted Heat Pump
    • North: SEER2 ≥16, EER2 ≥ 9, HSPF 2 ≥ 9.5
    • South: SEER2 ≥16, EER2 ≥12, HSPF 2 ≥ 9
  • Packaged Heat Pump
    • North: SEER 2 ≥15.2, EER2 ≥10, HSPF 2 ≥ 8.1
    • South: SEER2 ≥15.2, EER2 ≥10.6, HSPF 2 ≥ 7.2

Tax Section 25D: Residential Energy Efficient Property

Tax Section 25D is also included in the Inflation Reduction Act of 2022.  For homeowners who install an ENERGY STAR geothermal heat pump, this tax credit equals up to 30% of the installation costs. The program will also be available until 2032. 

High-Efficiency Electric Home Rebate Program (HEEHRP)

Aside from tax credits, the Inflation Act of 2022 also provides homeowners with income-based rebates. In this rebate program, you may be eligible for a 100% or 50% rebate, depending on your eligibility: 

  • A household earning 80% of the local median income is eligible for a 100% rebate.
  • Households with incomes between 80% and 150% of the local median qualify for a 50% rebate. 

Those earning more than 150% of the local median income are not eligible for rebates. 

Call CM Heating for High-Quality HVAC Installations

Are you in need of a new HVAC installation in your home? There has never been a better time to make this upgrade than now. Contact CM Heating to set up a consultation for a free estimate and to learn about the high-efficiency options available to you. 

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Based in Everett, CM Heating proudly serves Snohomish County, WA, North King County WA, and Skagit County, WA

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