Thinking about upgrading your aging, inefficient furnace or installing a new high-efficiency heat pump? There has never been a more financially urgent time to act!

The federal government’s generous Energy Efficient Home Improvement Credit (Section 25C), which helps homeowners offset the cost of new high-efficiency HVAC equipment, is set to expire on December 31, 2025. This means you only have a short window to take advantage of these significant tax credits that can put hundreds, or even thousands, of dollars back into your pocket.

At BuyComfortDirect.com, we not only supply the top-rated, qualifying systems, but we also ensure you have the information you need to maximize your energy savings and claim every available dollar.

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? Federal Tax Credits: The 2025 Savings Breakdown

The federal credit allows you to claim up to 30% of the project cost for qualifying installations, up to specific annual dollar caps. The maximum annual total credit you can claim for all eligible improvements is $3,200.

Here’s a breakdown of the two main categories that apply to your heating system upgrade:

Category 1: Gas Furnaces and Central AC Units

You can claim 30% of the cost, up to a maximum of $600, for installing a new:

• Qualifying Gas Furnace: The unit must meet the highest efficiency tier set by the Consortium for Energy Efficiency (CEE), which generally means a minimum of 97% AFUE.

• Qualifying Central Air Conditioner: Must meet specific SEER2 and EER2 ratings.

This $600 cap falls under a general $1,200 annual limit for non-heat pump improvements (like windows, doors, and insulation).

Category 2: Heat Pumps (The Largest Incentive)

The government is prioritizing the adoption of electric heating systems for long-term energy efficiency.

• Qualifying Heat Pumps (Air-Source & Geothermal): You can claim 30% of the cost, up to a maximum of $2,000.

• Dual-Fuel Systems: If you install a Dual-Fuel System (which pairs a gas furnace with a heat pump), the heat pump portion of the installation typically qualifies for the $2,000 credit, offering the single largest incentive for any one HVAC upgrade.

The $2,000 credit for heat pumps is separate from the $1,200 general cap, allowing you to combine these savings for the maximum yearly total!

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✅ Are You Eligible? 3 Key Qualifications

To successfully claim the Section 25C HVAC tax credit on your federal income taxes for 2025, you must meet the following criteria:

1. The Property Must Be Your Primary Residence

The credit only applies to equipment installed in your principal residence located in the United States. It does not apply to new construction or rental properties (if you do not reside there).

2. The Equipment Must Be “Placed in Service” by Dec. 31, 2025

This is the most critical deadline. The entire furnace installation or heat pump installation must be completed, operational, and in use before midnight on December 31, 2025. Simply ordering the unit is not enough—the installation must be finished.

3. The System Must Meet Strict Efficiency Standards

The unit must meet or exceed the specific ENERGY STAR® and CEE efficiency tiers. Every product listed on BuyComfortDirect.com specifies its ratings (AFUE, SEER2, HSPF2) so you can easily verify its eligibility. You will need the Manufacturer's Certification Statement and the product’s Qualified Manufacturer (QM) ID to file your taxes using IRS Form 5695.

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? Don't Forget Local and Utility Rebates!

Federal tax credits are just the beginning. To truly maximize your savings, you should also look into local incentives.

• Utility Rebates: Local gas and electric companies often offer their own rebates for installing high-efficiency equipment like 95% AFUE gas furnaces or high-SEER2 heat pumps. These rebates can range from $100 to over $1,000 and are often applied as a discount before you pay.

• State and Local Programs: Some states or municipalities have additional rebate programs, particularly for electric heat pump technology.

Pro Tip: Unlike federal tax credits, which you claim later when filing, utility rebates are often applied at the point of sale. We can help you identify and file for all the local incentives available in your area!