Heating and Cooling Tax Credits

Heating and Cooling Tax Credits

With the availability of tax credits and the increasing energy efficiency of appliances, heating and cooling units, many homeowners have made the choice to upgrade these products.

Here we will look at available, extended, and expiring tax credits, as well as how to claim them on your federal tax return.

Federal Tax Credits

Energy Star is a joint program of the U.S. Environmental Protection Agency (EPA) and the U.S. Department of Energy (DOE). It is a federal program that awards special labels to energy efficient products for the home or office.

The Energy Star Program provides federal tax rebates on certain products to offset the cost of purchasing products which will protect the environment and save homeowners money on energy costs. The program includes energy efficient appliances such as refrigerators, dehumidifiers, air conditioners, dishwashers, and clothes washers.

In addition to appliances, in 2021, Energy Star provided rebates for heating and cooling systems including heat pumps, central air conditioning, boilers, furnaces, water heaters and fans.

For a complete list of products with rebates, visit Energy Star’s Equipment Tax Credits for Primary Residences.

These tax credits are currently available for appliances and systems purchased up to December 31, 2021. While these tax credits have not yet been extended for 2022, it is possible legislation will be passed by Congress. You can watch for updates on the Energy Star Newsroom here.

Additional federal tax credits are given for insulation, roofs, windows, doors and skylights. While this credit is just a percentage of the total, and does not include installation costs, it is certainly enough to help offset the expenses of an upgrade to your home that will decrease future energy costs.

The Residential Renewable Energy Tax Credits will continue through December 31, 2023 and provide rebates of 22% to 30% of the product costs, dependent on the date of purchase and installation.

How to Apply

The U.S. Department of the Treasury requires Form 5695 to be completed on your federal tax return for residential energy credits. Click here to see instructions for Form 5695. To view or print Form 5695, click here.

Exclusions and Exceptions

The federal tax credits are available for primary residences only, with the exception of the following products which are permitted to be claimed for second homes and vacation properties.

  • Geothermal heat pumps
  • Solar panels
  • Solar water heaters, and
  • Small (residential) wind turbines

If you have questions about heating and cooling needs, or need a maintenance appointment for your home, please contact us at Pilchuck Heating.

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