How to Claim a Federal Tax Credit for a new AC Unit, Heat Pump or Air Duct Sealing

The Energy Efficient Home Improvement Credit

If you undertake certified energy-efficient upgrades to your residence after January 1, 2023, you may become eligible for a tax credit of as much as $3,200. This credit can be claimed for improvements completed through the year 2032.

$600 for HVAC unit replacement credit per item

$2,000 for Air Source Heat Pumps

Up to $1,200 for Air Duct Sealing

How can I maximize my tax credits?

If replacing your old heating or cooling system with a new AC Unit or heat pump, first upgrade attic insulation to save on energy costs. Doing both in one year can earn you tax credits of up to $1,200 for insulation and $600-$2,000 for the heat pump.

You can combine a heat pump installation ($2,000 credit) with window/door credits (up to $600 for windows, $500 for doors). Replacing your water heater later grants another 30% credit (up to $2,000) plus up to $600 for an electric panel upgrade or $1,200 for air duct sealing.

Allstate Air & Heating, LLC. wants to help you save big money with these tax credits and rebates for a new air conditioning unit, smart thermostat installation or air duct sealing service and call: 480-704-4828 or schedule an appointment online.

Federal Tax Credit FAQs

Frequently asked questions about energy efficient home improvements and residential clean energy property credits. Go to the official IRS FAQs page for more information.

K

L

What type of residence is required for the credit?

Taxpayers can claim energy credits for installations in their U.S. principal residence they own and use; renters and second homes generally do not qualify, except for certain appliances and energy audits in rental or second homes used as residences. Homes not used as a residence are ineligible.

K

L

May a taxpayer claim the federal tax credit if the property is also used for business purposes

Eligibility depends on property use. If used exclusively for business, no credit. If qualifying and business use is ≤20%, the full credit applies. If business use exceeds 20%, the credit is based only on expenses for nonbusiness use.

K

L

How can an individual taxpayer in a co-op or condominium determine their share of expenditures for qualified property when the co-op or management pays the expenses?

Taxpayers in co-ops and condos can claim section 25C credits based on their proportionate share of expenditures for qualified property, with records maintained by governing bodies. Examples involve tenants and unit owners receiving credits for their respective shares paid for improvements like exterior doors.

How to Claim an Arizona Tax Credit for a New AC Unit or Heat Pump?

Home Electrification and Appliance Rebate (HEAR Program)

Efficiency Arizona offers a HEAR rebate program through September 30, 2031 for qualified projects include the installation of Energy Star certified electric heat pumps for space heating and cooling (HVAC units and AC units). The incentive value is 100% of electrification project costs, up to $14,000, for low-income households, and 50% of costs, up to $14,000, for moderate-income households. There is a $500 incentive for project contractors per electrification project.

$8,000 for Energy Star certified HVAC or AC unit installation/replacement or electric heat pumps

Home Efficiency Rebate

Through September 30, 2031 the home efficiency rebate program will subsidize fifty percent of the expenses for projects undertaken by households earning up to 150% of the local median income—approximately $154,000 annually for a family of four in Phoenix. For families whose income does not exceed 80% of the median, the full cost of such projects will be eligible for coverage.

How can I maximize my tax credit?

These rebates can be used with other federal incentives depending on the project to lower costs even more. These rebates can be stacked if it uses the modeled approach (a method used to predict and analyze how energy is consumed within a system), not the measured approach.

Below is a list of qualifying projects that you can take advantage of using the “Rewiring America Calculator”.

Up to $1,600 for weatherization including insulation, air sealing, or ventilation.
Up to $8,000 for Energy Star certified electric heat pumps for space heating and cooling.
Up to $1,750 for Energy Star certified heat pump water heaters.
Up to $840 for Energy Star heat pump clothing dryers.
Up to $840 for Energy Star electric kitchen equipment.
Up to $4,000 for electric breaker boxes.
Up to $2,500 for electric wiring.

Allstate Air & Heating, LLC. wants to help you save big money with these tax credits and rebates for a new air conditioning unit, smart thermostat installation or air duct sealing service and call: 480-704-4828 or schedule an appointment online.

Arizona Tax Credit FAQs

Frequently asked questions about energy efficient home improvements and residential clean energy property credits. Go to the official Arizona Efficiency page for more information.

K

L

When and how are rebates issued

Rebates are factored into the contractor’s invoice, directly reducing the overall project expenses in accordance with the applicable rebate amounts eligible for deduction.

K

L

Will I be reimbursed for previously completed projects

This is a point-of-sale rebate initiative; therefore, reimbursements or retroactive rebates are not applicable. Only those projects that have received formal approval under the program are eligible to receive rebates, and they must be carried out by contractors who are qualified through Efficiency Arizona.

K

L

Is financing available

Efficiency Arizona itself does not offer or facilitate any form of financing. However, Allstate Air & Heating, LLC. does!

K

L

How do I apply for the HEAR program

If you are a homeowner and currently do not have a heat pump, click here to apply.

How to Claim the APS New Air Conditioner Unit Rebate

Arizona Public Service (APS) electrical company has a AC unit rebate program you don’t want to miss out on! To qualify for the rebate, Allstate Air & Heating, LLC. will submit the rebate form on your behalf and you must meet the following rebate requirements:

Replace your failed or failing AC unit with a qualifying emergency replacement installed by an APS approved ac repair service contractor (rebate is available once per household). The homeowner must be enrolled in our Energy Support program, and the installation must meet APS standards.
Rebate processing takes 6-8 weeks from the time your contractor submits paperwork to APS.

$200 for AC unit replacement

$1000 for AC unit replacement for customers in need

$250 for air ductwork repair and sealing

How to Claim the SRP New Air Conditioner Unit Rebate

The Salt River Project (SRP) offers an air conditioning rebate and residential rebate initiative that presents a worthwhile opportunity for savings you won’t want to overlook. To qualify for the rebate, Allstate Air & Heating, LLC. will submit the rebate forms on your behalf. If you’re considering a new AC unit, heat pump or mini-split system, the SRP Cool Cash™ Rebate can help lower your costs.

Here are some signs that it’s time to upgrade:

Your equipment is 10-plus years old.
Your system is extra noisy.
Your unit runs longer to maintain the same thermostat setting.

Up to $1,125 for new AC unit replacement, heat pump or mini split system.

Up to $100 for a new smart thermostate installation

Up to $400 for air duct repair and air sealing service

Allstate Wants To Make Air Conditioning Affordable For You & Your Family

Arizona summers can reach beyond 100°F. During these extreme conditions, your current AC system might struggle to keep up, leading to uneven cooling, higher utility costs, and increased wear and tear. Upgrading to a new, energy-efficient air conditioning system can provide numerous benefits:

Enhanced Cooling Efficiency: Modern AC units are designed to cool larger spaces more effectively while using less energy.

Lower Energy Bills: Newer models consume less power, helping you save on monthly electricity costs.
Improved Indoor Air Quality: Advanced filtration systems can reduce dust, allergens, and pollutants, creating a healthier indoor environment.

Long-Term Reliability: Investing in a new AC can reduce the likelihood of unexpected breakdowns during peak summer heat.

The federal and Arizona tax credits, along with APS and SRP rebates, cover various energy-efficient projects.

High-efficiency electric heat pumps
Central air conditioners
Duct and attic air sealing
Added attic insulation

Allstate Air & Heating, LLC. wants to help you save big money with these tax credits and rebates for a new air conditioning unit, smart thermostat installation or air duct sealing service and call: 480-704-4828 or schedule an appointment online.

Checklist for Claiming Your Tax Credits & Rebates

Gather Your Documentation: Keep detailed records of all receipts and invoices related to your HVAC system purchase and installation, including information such as brand, model number, and Energy Star certification. These documents are essential proof when claiming tax credits and can help you access potential financial benefits.

Know the Deadlines: Most tax credits require you to file within the same tax year that your installation was completed. Keep track of all deadlines to avoid missing them, as they can come up quickly—much like the sudden onset of a monsoon season.

Professional Installation and Compliance: To qualify for HVAC tax incentives, your installation must be done with care and precision, just like the equipment itself. That’s why choosing a professional installer is crucial.

Precision Matters: Allstate Air & Heating, LLC. knows the proper way to install an HVAC system, ensuring it operates at peak efficiency. It’s not just about comfort; it’s about making sure every bit of energy is used efficiently, maximizing your savings and eligibility for tax credits.
Code Compliance: Consider local building codes as the essential rules for construction projects. Allstate Air & Heating, LLC. is well-versed in these regulations, ensuring your installation complies with all standards. This helps you meet the necessary requirements and qualify for applicable tax incentives.
Manufacturer’s Blessing: HVAC systems must meet specific installation criteria to maintain their warranty. Allstate Air & Heating, LLC. strictly follows these standards, providing peace of mind by ensuring the setup matches the manufacturer’s specifications and helps prevent future issues.

Fill Out the Necessary Forms: Completing forms can often feel tedious, yet it is an essential component of the process. Be vigilant in ensuring you select and fill out the appropriate forms relevant to your specific tax credits. In particular, seek out IRS Form 5695 and verify that all details correspond accurately with your supporting documentation.

Consult With A Tax Professional: Whenever uncertainty arises, consulting a taxation expert can be highly beneficial. They possess the knowledge to help you maximize all entitled credits and can provide guidance throughout the filing process, ensuring everything is handled accurately and efficiently.

Submit and Track Your Credit: Once all necessary documents are reviewed and organized, proceed to submit your credit information alongside your tax return to the IRS. Afterward, exercise patience as the processing occurs. It’s advisable to monitor your credit status periodically, since these procedures can sometimes take a little time to finalize.

Allstate Air & Heating, LLC. wants to help you save big money with these tax credits and rebates for a new air conditioning unit, smart thermostat installation or air duct sealing service and call: 480-704-4828 or schedule an appointment online.