Can I Receive a Tax Credit for Air-Source Heat Pumps?

by Jackie Lohrey ; Updated July 27, 2017
A couple is filling out their tax forms with an accountant present.

According to EnergyStar.gov, about 46 percent of the average annual energy bill for a single home goes toward heating and cooling. One way to reduce these costs, especially if you live in a moderate-to-cold-weather climate, is to install an Energy Star-qualified air-source heat pump. The Massachusetts Clean Energy Center says an efficient heat pump uses about one-third of the electricity of traditional electric heat. To stimulate sales, the American Recovery and Reinvestment Act of 2009 extended tax incentives on the purchase of an air-source heat pump until 2016.

Tax Credit Criteria

The current tax credit for a qualifying Energy Star air-source heat pump falls under the home energy efficiency credits conventional HVAC category. The tax credit allows you to deduct 30 percent of the total system cost up to $1,500. When shopping, look at the Energy Star tag, which will state whether the unit qualifies for a tax credit. According to instructions on Internal Revenue Service Form 5695 -- Residential Energy Credits -- total system costs include the initial purchase, as well as labor costs for on-site preparation, assembly and installation. Unless the federal government extends the tax credit program again, you have until Dec. 31, 2016, to purchase and install the unit.

About the Author

Based in Green Bay, Wisc., Jackie Lohrey has been writing professionally since 2009. In addition to writing web content and training manuals for small business clients and nonprofit organizations, including ERA Realtors and the Bay Area Humane Society, Lohrey also works as a finance data analyst for a global business outsourcing company.

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