The 2024 HVAC tax credit covers heat pumps, but not all heating and cooling systems
The federal tax credit for HVAC equipment in 2024 is limited to air-source heat pumps and ground-source heat pumps (also called geothermal systems). A standard air conditioner or furnace does not may have access to, even if it is new and efficient. The credit is worth up to $2,000 for a heat pump installation, claimed on your Form 1040 when you file your 2024 tax return.
The system must be installed in your primary residence — a house, townhouse, or condo where you live most of the year. Rental properties, vacation homes, and second residences do not may have access to. The installation must happen between January 1, 2024, and December 31, 2024, and you must have paid for it with your own money (not through a rebate program that covers the full cost).
The credit phases out based on your household income. For 2024, the income limits are $174,000 for single filers and $348,000 for married couples filing jointly. If your income exceeds these thresholds, you do not may have access to for this particular credit.
Key Takeaways
- Only air-source and ground-source heat pumps may have access to for the 2024 credit; standard air conditioners and furnaces do not.
- The credit is worth up to $2,000 and is claimed on Form 1040 when you file your 2024 tax return.
- The system must be installed in your primary residence between January 1 and December 31, 2024.
- Your household income must be below $174,000 (single) or $348,000 (married filing jointly) to claim the credit.
- You must have paid for the installation yourself; systems fully covered by rebates do not may have access to.
What counts as a may have access to heat pump
A heat pump is a system that moves heat from one place to another rather than generating heat by burning fuel or using resistance coils. In winter, it pulls heat from outside air or the ground and moves it into your home. In summer, it reverses and pulls heat out of your home to cool it. This is different from a furnace (which burns fuel or uses electric resistance) or an air conditioner (which only cools).
An air-source heat pump exchanges heat with the outside air. It looks similar to an air conditioner unit but works year-round. Most residential heat pump installations are air-source systems because they cost less and require less site preparation than ground-source systems.
A ground-source heat pump (geothermal) exchanges heat with the ground through buried pipes. These systems are more efficient than air-source heat pumps but cost significantly more to install because they require digging or drilling. Both types may have access to for the 2024 credit.
The system must be new — not used or refurbished. It must also meet the Department of Energy's efficiency standards for the year of installation. Your contractor should be able to confirm whether a specific model meets the 2024 requirements, and the manufacturer's documentation will list the efficiency rating.
How to claim the credit on your tax return
The HVAC credit is claimed using Form 5695 (Residential Energy Credits), which you attach to your Form 1040. You will need the following documents from your contractor: the date the system was installed, the total cost you paid, and the manufacturer's name and model number.
On Form 5695, you report the cost of the heat pump equipment and installation labor. The form calculates 30% of that cost (up to a maximum credit of $2,000). You then transfer this amount to Form 1040 as a non-refundable credit, which reduces your federal income tax dollar-for-dollar.
If you have not received a Form 1098-T or other documentation from your contractor, ask for an invoice that clearly shows the installation date and the total amount paid. Keep this with your tax records. You do not send Form 5695 to the IRS with your return — you keep it with your records — but the credit itself appears on your Form 1040.
If the credit is larger than the tax you owe, you cannot carry the unused portion forward to future years. For example, if your tax liability is $1,500 and your credit is $2,000, you can use $1,500 of the credit and lose the remaining $500.
Systems that do not may have access to
Standard air conditioners, furnaces, and boilers do not may have access to, regardless of their efficiency rating. A high-efficiency air conditioner or furnace may lower your energy bills, but it does not generate a federal tax credit under the 2024 rules.
Ductless mini-split systems (also called ductless heat pumps) do may have access to if they are heat pumps, but the credit rules for mini-splits are complex. Some contractors and tax preparers treat them differently depending on how they are installed and whether they are the primary heating system. If you have a mini-split system, ask your contractor whether it qualifies and get written confirmation before claiming the credit.
Hybrid systems that combine a heat pump with a furnace or boiler may may have access to, but only the heat pump portion of the cost counts toward the credit. Your contractor should be able to separate the costs on your invoice.
Systems installed before January 1, 2024, or after December 31, 2024, do not may have access to for the 2024 credit, even if you pay for them in a different tax year. The credit is based on the installation date, not the purchase or payment date.
Income limits and how they affect your credit
The 2024 HVAC credit is available only to taxpayers whose household income falls below the threshold for their filing status. For single filers, the limit is $174,000. For married couples filing jointly, it is $348,000. For heads of household, it is $261,000.
Household income for this purpose is your modified adjusted gross income (MAGI), which is usually the same as your adjusted gross income (AGI) shown on your Form 1040. If your income exceeds the limit, you cannot claim the credit at all — there is no partial credit for those slightly over the threshold.
These income limits explore to the 2024 tax year and may change for 2025 and beyond. If you are near the limit, calculate your expected AGI carefully before claiming the credit, or consult a tax preparer to confirm your may be able to access.
What to do if you paid for installation in 2024 but have not filed yet
If your heat pump was installed in 2024 and you have not yet filed your 2024 tax return, you can claim the credit when you file. Gather your contractor's invoice showing the installation date and total cost paid. If you file before receiving all documentation, you can file an amended return (Form 1040-X) later to add the credit.
If you paid for the installation in 2024 but the contractor has not yet installed the system, the credit applies to the year the system is actually installed, not the year you paid. For example, if you paid in December 2024 but installation happens in January 2025, you claim the credit on your 2025 tax return.
If you received a state or local rebate that covered part of the cost, you can still claim the federal credit on the portion you paid out of pocket. However, if a rebate covered the entire cost, you have no basis for the federal credit because you did not pay anything.
Frequently Asked Questions
Can I claim the credit if I financed the heat pump through a loan?
Yes. The credit is based on the cost of the system, not how you paid for it. Whether you paid cash, used a loan, or used a credit card, you can claim the credit as long as you paid the cost yourself and the system was installed in 2024.
Does a ductless mini-split heat pump may have access to?
It may, but the rules are complicated. Ductless systems are heat pumps and can may have access to, but some tax preparers and the IRS treat them differently depending on whether they are your primary heating system and how the contractor invoices the work. Ask your contractor in writing whether your specific system qualifies before claiming the credit.
What if my household income is $175,000 and the limit is $174,000?
You do not may have access to. The credit has a hard income cutoff with no phase-out. If your income exceeds the limit by even $1, you cannot claim the credit. There is no partial credit for those slightly over the threshold.
Can I claim the credit if the heat pump was installed in my rental property?
No. The credit is only for systems installed in your primary residence — the home where you live most of the year. Rental properties, vacation homes, and investment properties do not may have access to.
What if I had a heat pump installed in 2023? Can I claim the credit on my 2024 return?
No. The credit is based on the year the system was installed. A 2023 installation is claimed on your 2023 tax return. If you did not claim it then, you can file an amended 2023 return (Form 1040-X) to add it, but you cannot claim it on your 2024 return.