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Energy Tax Credits for 2023

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Dallas Plumbing & Air Conditioning - Energy Tax Credits for 2023

We’ve all felt the effects of the current economy.   The rising inflation costs  have caused us to part ways with our hard-earned money faster than ever. That’s why those of us with outdated heating and cooling systems avoid the topic of upgrading. Doing so costs hundreds if not thousands of dollars, making many people nervous. With the help of the most recent legislation, ,the installation costs of a new unit are becoming , more bearable. Below we will briefly discuss the new laws and how they benefit homeowners.

What is the Inflation Reduction Act?

To slow down the rate of inflation, our legislators passed the Inflation Reduction Act of 2022. This law is designed to provide a handful of tax deductions and claims for those who make energy-efficient upgrades. These tax breaks serve the dual purpose of providing financial support for those who make these home improvements and supporting our society’s goals of reducing our carbon footprint by conserving energy.

Taking Advantage of 25C Tax Credit

One of the biggest tax breaks currently offered is the 25C Tax Credit, which offers a 30% credit of the total installation costs of a high efficiency-tier, ENERGY STAR-certified HVAC product such as an air conditioner, heat pump, or furnace. For the most part, the qualifications for this credit depend upon the region of the country you live in (North or South) and if you meet the energy efficiency criteria for Texas as outlined below: 

 Air Conditioners

Claim your $600 credit when you meet the following criteria for a split or packaged AC:

  • Split AC
    • Nationally: SEER 2 ≥16, EER2 ≥12, 
  • Packaged AC
    • Nationally: SEER 2 ≥15.2, EER2 ≥11.5

Heat Pumps

Claim up to $2,000 in tax credits when installing heat pumps that meet the following requirements: 

  • Split Ducted Heat Pump
    • South: SEER2 ≥15.2, EER2 ≥11.7, HSPF 2 ≥ 7.8
  • Non-Ducted Heat Pump
    • South: SEER2 ≥16, EER2 ≥12, HSPF 2 ≥ 9
  • Packaged Heat Pump
    • South: SEER2 ≥15.2, EER2 ≥10.6, HSPF 2 ≥ 7.2


If you’re getting ready to install a furnace, you may claim a maximum tax credit of $600 if you choose to purchase a gas-fired forced air furnace rated at 97% AFUE in 2023.

Tax Section 25D

If you choose to install an ENERGY STAR geothermal heat pump, you also have the advantage of claiming a credit with Tax Section 25D. If your heat pump installation meets the criteria, you will receive a tax credit equaling 30% of the installation costs. 

Income-Based Energy Rebates

As part of the Inflation Act of 2022, homeowners also have the option to receive income-based rebates. The rebate program may offer you a 100% or 50% rebate, depending on your eligibility: 

  • Ahousehold earning 80% of the local median income  is eligible for a 100% rebate.
  • A 50% rebate is available to households earning between 80% and 150% of the local median income. 

Unfortunately, rebates are unavailable to those earning over 150% of the local median income. 

Leading HVAC Installations in Dallas, TX

Are you in the market for a new heating or cooling system for your home? Look no further than Dallas Plumbing & Air Conditioning, the most reputable HVAC installation company in the region. We’ve been in business since 1903 and have been serving the community for 120 years. We have the most skilled and experienced technicians who make the installation process seamless and smooth. Give us a call at (866) 576-0976.

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