Time Is Running Out: Claim the HVAC Tax Credit Before It Ends in 2025

Jul 27

If you’ve been planning to upgrade your HVAC system, now is the time to act. The Energy Efficient Home Improvement Credit (25C)—a popular federal tax credit that helps homeowners save on qualifying energy upgrades—is set to expire after December 31, 2025, due to the recently passed One Big Beautiful Bill (OBBBA).

This change significantly shortens the original timeline, which had extended through 2032. For homeowners looking to improve comfort, lower energy bills, and save on installation costs, 2025 is the final year to take full advantage of this incentive.

🧾 What Is the 25C Tax Credit?

The Energy Efficient Home Improvement Credit (25C) allows homeowners to claim 30% of the cost of certain qualifying energy-efficient improvements, up to an annual cap of $3,200.

Here’s what’s covered under the current program:

Up to $2,000 for qualified heat pumps and heat pump water heaters
Up to $600 for electrical panel upgrades (when installed with a heat pump)
Up to $1,200 combined annually for insulation, windows, doors, and energy audits
Installation labor is included for HVAC-related upgrades

To qualify, the system must be installed and placed in service by December 31, 2025.

⚠️ What the One Big Beautiful Bill Changes

The OBBBA, signed into law on July 4, 2025, accelerates the sunset of the 25C credit, which was previously available through 2032. This means:

No 25C credits will be available for systems installed after 2025
Homeowners must complete projects and have them operational before year-end to qualify
Any unused tax credit cannot be carried forward, so timing is critical

⏳ Why You Shouldn’t Wait

Delaying your HVAC upgrade could mean missing out on hundreds to thousands of dollars in federal tax credits. Without the 25C credit:

The cost of energy-efficient upgrades will rise
The payback period will increase, making upgrades less financially attractive
Homeowners may face longer lead times and installation backlogs as the deadline approaches

✅ What You Should Do Now

Evaluate your current HVAC system
If it’s inefficient, frequently needs repairs, or is over 10–15 years old, now is the perfect time to consider an upgrade.
Plan your project timeline
Don’t wait until late in the year—schedule your installation early to ensure you qualify.
Talk to a tax professional
Understand how the 25C credit applies to your unique situation and confirm the documentation you’ll need.

💬 Have Questions?

Service First Heating and Cooling can help guide you through your upgrade options and ensure your system is installed and operational before the December 31 deadline.

📞 Contact us today to schedule your free estimate and take advantage of the 25C credit—before it’s gone for good.