2023 Tax Credits Explained

Dougs 2023 Tax Credits Explained

Those of us looking to upgrade our HVAC systems have likely been watching the prices increase, hoping they start to go back down.  However, with the current inflation, prices are only going up, making air conditioning systems more expensive. However, with the implementation of the Inflation Reduction Act of 2022, there is a way to make these big investments a little more affordable. In this blog, we will define what the Inflation Reduction Act is and how to take advantage of it to make HVAC installation more affordable. 

What is the Inflation Reduction Act of 2022?

The Inflation Reduction Act is our government’s attempt to slow down the rate of inflation by reducing the deficit, lowering the prices of prescription drugs, and incentivizing Americans to invest in clean and energy-efficient products like cars and HVAC systems. These incentives come in the form of tax credits that will return a portion of HVAC installation costs when you file your taxes. Let’s explore some of these incentives to understand how to qualify. 

25C Tax Credit 

The 25C Tax Section is a credit for energy-efficient upgrades in residential properties. It provides a credit of 30% of installation costs for HVAC equipment that is ENERGY STAR certified and falls into the energy efficiency requirements set forth for your specific region of the country. Below, we break down these requirements for each HVAC product as it applies to Louisiana. 

Heat Pumps

You can claim $2,000 in tax credits when you purchase heat pumps that meet the following requirements: 

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

Air Conditioners

You can claim a tax credit of $600 if your new air conditioner meets the following criteria:

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


The maximum tax credit in 2023 is $600 for homeowners who purchase a gas-fired forced air furnace rated at 97% AFUE.

25D Tax Credit 

Tax section 25D is also a tax credit for residential, energy-efficient properties. This tax credit covers 30% of installation costs of ENERGY STAR certified geothermal heat pumps. This tax credit will be in effect until 2023 and will gradually drop with each year after 2023. 

Income-Driven Energy Rebates

The Inflation Act of 2022 also provides homeowners with income-based rebates. Under this rebate program, you may qualify for a 100% or 50% rebate if you meet the following criteria: 

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

A rebate is not available to those earning more than 150% of the local median income. 

Call Doug’s Service Company for First Class HVAC Installations!

Are you in need of a new HVAC system like a furnace, air conditioner, or heat pump? Look no further than Doug’s Service for seamless and high-quality installations. Take advantage of these programs to make these installations more affordable to you. 

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