A new central air conditioner qualifies for a federal air conditioner tax credit only if it was installed and running in your home on or before December 31, 2025. The Energy Efficient Home Improvement Credit under Internal Revenue Code Section 25C, which offered up to $600 for a qualifying central AC unit, was repealed for equipment placed in service after that date.1Internal Revenue Service. FAQs for Modification of Sections 25C, 25D, 25E, 30C, 30D, 45L, 45W, and 179D Under the One Big Beautiful Bill If your unit went in during 2025 and you haven’t filed yet, you can still claim it on your 2025 return.
The 2025 Cutoff
The One Big Beautiful Bill Act, signed in July 2025, ended the Section 25C credit for any property placed in service after December 31, 2025.1Internal Revenue Service. FAQs for Modification of Sections 25C, 25D, 25E, 30C, 30D, 45L, 45W, and 179D Under the One Big Beautiful Bill
“Placed in service” means the date the equipment was fully installed and operational. Contract signing dates, purchase dates, and delivery dates don’t count. A unit finished on December 30, 2025, qualifies. A unit finished on January 2, 2026, does not.
How Much the Credit Is Worth for a 2025 Install
The credit equals 30% of the total project cost, including both equipment and labor to install it.2Office of the Law Revision Counsel. 26 U.S. Code 25C – Energy Efficient Home Improvement Credit Two caps then apply:
- The maximum credit for a central air conditioner is $600, no matter how many units you installed.3Office of the Law Revision Counsel. 26 USC 25C – Energy Efficient Home Improvement Credit
- All energy-efficient home improvements combined, including insulation, windows, doors, and AC, are limited to $1,200 per year.4Internal Revenue Service. Energy Efficient Home Improvement Credit
Heat pumps have their own separate $2,000 annual limit on top of the $1,200 cap, but that doesn’t apply to standard central air conditioners.4Internal Revenue Service. Energy Efficient Home Improvement Credit
The credit is nonrefundable. It can reduce your tax bill to zero but won’t create a refund, and there is no carryforward. If you don’t owe enough tax in 2025 to use the full credit, the unused portion is gone.5Internal Revenue Service. Energy Efficient Home Improvement Credit – Timing of Credits
Efficiency Ratings the Unit Must Meet
The equipment has to meet the highest efficiency tier set by the Consortium for Energy Efficiency (CEE) in effect at the start of the installation year, excluding any advanced tiers. For units installed in 2025:6ENERGY STAR. Central Air Conditioners Tax Credit
- Split systems need SEER2 of 17.0 or higher and EER2 of 12.0 or higher.
- Packaged systems need SEER2 of 16.0 or higher and EER2 of 11.5 or higher.
SEER2 and EER2 are the current efficiency metrics under testing procedures the Department of Energy adopted in 2023. The “2” indicates the updated testing standard, not a version number for your unit. Most qualifying units carry ENERGY STAR certification, but eligibility ultimately tracks the CEE tier rather than the ENERGY STAR label. You can confirm your model using the Department of Energy’s online lookup tool.7Department of Energy. Tax Credit Product Lookup Tool
The 2025 thresholds are higher than they were in 2024, when split systems needed only SEER2 of 16.0. A unit that met the 2024 standard may not qualify for a 2025 installation.
Which Homes Qualify
The residence rule for central air conditioners is more flexible than for insulation, windows, or exterior doors. Those require your principal residence. A central AC unit only had to be installed in a home “used as a residence by the taxpayer,” which meant a second home you actually lived in part of the time could qualify.8Internal Revenue Service. Energy Efficient Home Improvement Credit – Qualifying Residence
A pure rental property that you don’t personally use as a residence never qualified. New construction didn’t qualify either; the home had to be an existing structure in the United States.4Internal Revenue Service. Energy Efficient Home Improvement Credit
How to File for a 2025 Installation
Claim the credit by completing Part I of IRS Form 5695 (Residential Energy Credits) and carrying the amount to your Form 1040.9Internal Revenue Service. Instructions for Form 5695 – Residential Energy Credits
For equipment placed in service on or after January 1, 2025, you must include the manufacturer’s Product Identification Number (PIN) on Form 5695. That’s a 17-character code the manufacturer assigns to confirm the product meets the required efficiency standards, and it’s now mandatory.10Internal Revenue Service. Energy Efficient Home Improvement Credit – PIN Requirements
You don’t submit supporting documents with your return, but keep them in case the IRS asks:
- An itemized invoice or receipt showing equipment and labor costs separately.
- The Manufacturer’s Certification Statement, which confirms the unit meets the CEE highest tier and lists its SEER2 and EER2 ratings. It’s usually on the manufacturer’s website or in the product packaging.
- Proof the unit was placed in service on or before December 31, 2025, such as a signed completion certificate from the installer or the final invoice date.
How Rebates Affect the Credit
Rebates can quietly change what you’re allowed to claim. Manufacturer, distributor, or installer rebates tied to the equipment cost are treated as purchase-price reductions. Subtract them from your qualified expenses before you calculate the 30%.11Internal Revenue Service. Energy Efficient Home Improvement Credit – General Questions Public utility subsidies work the same way, whether the payment is issued to you or to your contractor.4Internal Revenue Service. Energy Efficient Home Improvement Credit
State energy-efficiency incentives are handled differently. State payments generally don’t reduce your qualified costs, because they don’t meet the federal definition of a purchase-price adjustment. They can, however, count as taxable income on your federal return.4Internal Revenue Service. Energy Efficient Home Improvement Credit A $500 state incentive typically won’t shrink your federal credit, but it might add $500 to your taxable income.
What’s Left for 2026 Buyers
No federal tax credit applies to a standard central air conditioner installed in 2026. Heat pumps installed in 2026 are also cut off from the Section 25C credit, because the repeal covers the whole credit, not just the AC portion.1Internal Revenue Service. FAQs for Modification of Sections 25C, 25D, 25E, 30C, 30D, 45L, 45W, and 179D Under the One Big Beautiful Bill
A separate program, the High-Efficiency Electric Home Rebate Act (HEEHRA), still offers income-based, point-of-sale rebates for heat pump systems, not standard central AC. HEEHRA is administered state by state and rollout has been uneven, with some states already out of funding. If you’re installing standard central AC in 2026, the remaining route to savings is your local utility company, which may offer efficiency rebates independent of any federal program.