Taxes can be confusing, but when it comes to upgrading your home’s heating and cooling system, there’s a valuable opportunity that can make the process easier on your wallet. The federal government provides a significant tax credit designed to help homeowners make energy-efficient upgrades, and a new, qualifying heat pump system is at the top of the list.
Time is running out to claim your tax credit. Don't wait—contact us today to start your upgrade and secure your savings! (405) 442-4643 or fill out our online contact form.
What is the Energy Efficient Home Improvement Credit?
The Energy Efficient Home Improvement Credit is a federal tax credit that can reduce your tax bill if you make certain energy-efficient improvements to your home. It’s a powerful incentive created to help more homeowners access modern, energy-saving technology while enjoying a healthier home environment. While this credit has existed for a while, recent changes have made it more crucial for homeowners considering a heat pump upgrade.
What makes this opportunity so timely is the expiration date. Recent legislation has moved the deadline for this credit up to December 31, 2025. That means all qualifying installations must be completed by the end of the year. For homeowners in Oklahoma City, Edmond, Stillwater, and Kingfisher County who have been considering an HVAC replacement, the time to act is now.
Why a Heat Pump is the Smart Choice for Your Oklahoma Home
If you're already thinking about replacing your aging HVAC system, you may be wondering what the best option is for a home in our region. Heat pumps are an excellent choice for our climate, offering both powerful heating in the winter and efficient cooling in the summer, all in one system. They don’t generate heat by burning fossil fuels; instead, they move existing heat from one place to another. Here are a few reasons why a heat pump is a great fit for homes here:
- Year-Round Comfort: A single heat pump unit provides both heating and cooling, eliminating the need for separate furnace and air conditioning units.
- Energy Efficiency: Because they simply move heat rather than creating it, modern heat pumps use less electricity than traditional systems, which can lead to lower energy bills.
- Reduced Carbon Footprint: By using less energy, heat pumps help reduce your home’s environmental impact. This is a benefit for homeowners who want to live more sustainably.
- Improved Air Quality: A new heat pump can also improve indoor air quality by filtering the air as it circulates throughout your home.
Many homeowners across the country are choosing to install heat pumps not just for the immediate financial benefit of a tax credit, but for the long-term savings on their monthly utility bills. The Energy Efficient Home Improvement Credit just makes the decision that much easier and more financially accessible.
The 25C Tax Credit for Heat Pumps
The 25C credit allows homeowners to claim up to $2,000 for a new, qualifying heat pump installation. This credit is equal to 30% of the total project cost, which includes the cost of the unit itself and the labor to install it. The $2,000 is a maximum amount, so if your project costs less, you can still claim 30% of that total. To be eligible for the credit, a few key conditions must be met:
- Primary Residence: The improvement must be made to your principal residence, which is the home where you live most of the time. This credit is also available for second homes, though not for new construction.
- Qualifying Unit: The heat pump must meet the energy efficiency standards set by the Consortium for Energy Efficiency (CEE). This isn't something you need to worry about on your own; a professional HVAC provider like Air It Out Heating & Cooling can help you select a system that meets all the necessary qualifications.
- Completed by Deadline: The installation must be completed by the deadline of December 31, 2025. This means you should begin planning your project well in advance to ensure completion before the end of the year.
The 25C credit is considered a “non-refundable” tax credit, which means it can reduce your tax liability to zero, but you won't receive the remainder of the credit back as a refund if your tax bill is already zero. For example, if you owe $1,000 in taxes and you're eligible for a $2,000 credit, the credit will reduce your tax bill to $0, and the remaining $1,000 of the credit is not refundable.
How to Claim Your Tax Credit
Claiming this credit is a straightforward process, but it requires careful record-keeping. Here’s a simple guide to what you need to do:
- Work with a Qualified Professional: The first step is to partner with an HVAC company that can help you select a qualifying heat pump and handle the installation. Air It Out Heating & Cooling specializes in professional heat pump installations for Oklahoma City, Edmond, Stillwater, and Kingfisher County homeowners. We can help you navigate the entire process, from finding the right unit to ensuring a smooth installation. To learn more about our heat pump services, visit our heat pump service page.
- Keep Your Paperwork: After the installation is complete, make sure you keep all receipts and invoices. These documents serve as proof of the project’s cost, the date of installation, and that the unit is a qualifying model.
- File IRS Form 5695: When you file your federal income tax return for the year your new heat pump was installed, you will need to fill out and attach IRS Form 5695, titled "Residential Energy Credits." This form is where you will report the details of your heat pump upgrade and calculate the credit amount. You can claim this credit even if you take the standard deduction on your tax return.
Taking these steps ensures you are prepared to claim the savings you are due.
Take Action Before It's Too Late
The opportunity to save up to $2,000 on a new heat pump system won’t last forever. As the December 31, 2025, expiration date approaches, homeowners across Oklahoma will be looking to get their projects completed. Planning ahead can help ensure you don’t miss out on this valuable tax credit. If your HVAC system is aging and you're ready to upgrade to a modern, efficient heat pump, now is the ideal time to take the next step.
Contact our team at Air It Out Heating & Cooling to discuss your options and get started. We are committed to helping you find a solution that keeps your home comfortable and helps you maximize your financial gain. You can reach us by phone at (405) 442-4643 or by using our online contact form.