Federal Tax Credits for HVAC
Up to $2,000 for Arizona Homeowners
The Inflation Reduction Act (IRA) provides significant federal tax credits for qualifying HVAC upgrades. Bradford installs Trane systems that qualify — and can help you understand what you're eligible for before you buy.
Tax advice disclaimer: Bradford is an HVAC contractor, not a tax professional. The information below is for general guidance only. Always consult a qualified tax professional or CPA before claiming credits on your return. Tax law changes frequently — verify current requirements at IRS.gov.
2025 HVAC Tax Credits at a Glance
These credits apply to systems installed in your primary residence. The annual cap for all 25C credits combined is $3,200.
Heat Pump Installation
Requirement: SEER2 ≥ 15.2 (split system)
Trane XL18, XV20 qualify
Central Air Conditioner
Requirement: SEER2 ≥ 16 (South/Southwest zone)
Trane XR17, XL18, XV20 qualify
Gas Furnace
Requirement: AFUE ≥ 97%
Ask Bradford about qualifying models
Air Source Heat Pump (Ductless)
Requirement: SEER2 ≥ 15.2, HSPF2 ≥ 7.8
Bradford installs qualifying mini-splits
Stack Your Savings — APS & SRP Rebates
In addition to federal tax credits, Arizona utility companies offer rebates for qualifying high-efficiency systems. These can be stacked with the federal credit.
APS Rebates
- $75–$300 for qualifying heat pumps
- $75–$200 for qualifying central AC
- Must be installed by a licensed contractor
SRP Rebates
- $100–$400 for qualifying heat pumps
- $50–$200 for qualifying central AC
- Must be ENERGY STAR certified
Example: Trane XL18 Heat Pump in Surprise, AZ
Installed price ~$16,051 · Federal credit $2,000 · APS rebate ~$200 · Net cost: ~$13,851
Tax Credit FAQ
What is the federal tax credit for a new heat pump in Arizona?
Under the Inflation Reduction Act (IRA), Arizona homeowners can claim a federal tax credit of up to $2,000 (30% of the cost) for installing a qualifying heat pump. The credit applies to the equipment and installation cost. To qualify, the heat pump must meet efficiency standards (SEER2 ≥ 15.2 for split systems). Bradford installs Trane heat pumps that qualify for the full credit.
What is the federal tax credit for a new central AC in Arizona?
The Energy Efficient Home Improvement Credit (25C) provides up to $600 (30% of cost) for a qualifying central air conditioner. To qualify, the AC must meet ENERGY STAR Most Efficient criteria (SEER2 ≥ 16 for split systems in the South/Southwest climate zone). Bradford's Trane XR17, XL18, and XV20 systems qualify.
Can I claim both the heat pump credit and the AC credit?
No — you can only claim one credit per system. If you install a heat pump, you claim the $2,000 heat pump credit. If you install a traditional AC + furnace, you may claim the $600 AC credit and a separate $600 furnace credit (if the furnace qualifies). The total annual cap for the 25C credit is $3,200.
How do I claim the HVAC tax credit on my taxes?
You claim the credit on IRS Form 5695 when filing your federal taxes. Bradford provides a receipt showing the equipment model number and installation date. You'll need to verify the equipment meets efficiency requirements — Bradford can confirm which systems qualify at the time of installation.
Does Arizona have any additional state rebates for HVAC?
Arizona does not currently have a state income tax credit for HVAC. However, APS and SRP offer rebates for qualifying high-efficiency systems. APS offers rebates of $75–$300 for qualifying heat pumps and central AC systems. Check aps.com/rebates or srpnet.com/rebates for current offers. Bradford can help you identify which rebates apply to your system.
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