Illinois residents can benefit from federal tax credits for energy-efficient HVAC systems. The Inflation Reduction Act of 2022 expanded the Energy Efficient Home Improvement Tax Credit (25C), allowing homeowners to claim 30% of the cost of qualified HVAC equipment, up to certain annual limits.
Geothermal equipment that uses stored solar energy from the ground for heating and cooling and that meets ENERGY STAR requirements at the time of installation is eligible for the tax credit. The credit is unlimited, and it can be claimed multiple times.
Eligible Equipment:
Heat pumps, heat pump water heaters, central air conditioners, furnaces, and other qualified HVAC systems.
Credit Amount:
30% of the installation cost, up to annual limits.
Annual Limits:
$1,200 for certain HVAC equipment (like central air conditioners and furnaces) and $2,000 for heat pumps and heat pump water heaters. The overall annual limit is $3,200 for all eligible improvements.
Credit Details:
The credit is non-refundable, meaning it can reduce your tax liability to zero, but not below zero.
Claiming the Credit:
You can claim the credit when you file your federal income tax return by reporting the installation of eligible equipment and providing the manufacturer’s information and PIN.
Timeframe:
The credit is available for qualified installations between January 1, 2023, and December 31, 2032.
