What Appliances Qualify for Energy Tax Credits and Rebates?

The appliances and equipment that qualify for federal energy tax credits and rebates fall into two overlapping lists, one for each program. The Energy Efficient Home Improvement Credit covers heat pumps, heat pump water heaters, central air conditioners, furnaces, boilers, conventional gas or oil water heaters, exterior windows and skylights, exterior doors, insulation and air sealing, electrical panel upgrades, and home energy audits, with a maximum of $3,200 per year. The Home Electrification and Appliance Rebates program covers heat pumps, heat pump water heaters, electric stoves and cooktops, heat pump clothes dryers, insulation and ventilation, electrical panel upgrades, and wiring, up to $14,000 per household for income-eligible families. Standard refrigerators, freezers, and non-heat-pump clothes washers and dryers do not qualify for either federal program.

Two Programs, Two Sets of Rules

The Inflation Reduction Act created two separate paths, and they work differently enough that people frequently mix them up.

The Energy Efficient Home Improvement Credit under Section 25C of the tax code is claimed on your federal return using IRS Form 5695. It reduces your tax bill dollar for dollar, up to $3,200 per year, has no income limit, and runs for improvements installed from January 1, 2023, through December 31, 2032.¹

The Home Electrification and Appliance Rebates (HEAR) program is funded by $4.5 billion from the IRA and administered through state energy offices. HEAR is income-restricted: only households earning below 150 percent of the area median income qualify, and those at or below 80 percent of AMI receive larger rebates.² A parallel program, Home Efficiency Rebates (HOMES), covers whole-house retrofits with no income cap, though lower-income households receive higher amounts.³

One important caveat: as of early 2026, most states have not yet launched their HEAR programs. Funding was allocated, but rollout has been slow. Check your state energy office’s website for current status before planning around a HEAR rebate, and do not delay a necessary equipment purchase waiting for one that may not be available where you live.

Appliances and Equipment That Qualify for the Tax Credit

The Section 25C credit covers 30 percent of the cost of qualifying items, subject to annual limits that reset every January. Two caps apply: $1,200 for most improvements and a separate $2,000 for heat pumps, heat pump water heaters, and biomass stoves or boilers. A household making purchases in both categories in the same year can claim up to $3,200 total.⁴

Heat Pumps and Heat Pump Water Heaters

Air-source heat pumps for space heating and cooling and heat pump water heaters share the $2,000 annual cap along with biomass stoves and boilers. Installing both a heat pump and a heat pump water heater in the same year still tops out at $2,000 combined. Labor costs for installing these systems do count toward the credit.¹ Because the cap resets each January, spreading two large purchases across two tax years can let you claim $2,000 in each.

Central AC, Furnaces, Boilers, and Water Heaters

Central air conditioners, natural gas or propane furnaces, hot water boilers, and conventional water heaters running on natural gas, oil, or propane each qualify for up to $600 per item under the $1,200 annual cap. They must meet or exceed the Consortium for Energy Efficiency’s highest efficiency tier (not including any advanced tier) in effect at the start of the installation year. Labor is included in the covered cost.¹

Windows, Doors, Insulation, and Air Sealing

Building envelope items have their own sub-limits inside the $1,200 cap:

Exterior windows and skylights: up to $600 total, ENERGY STAR Most Efficient certification required.
Exterior doors: up to $250 per door and $500 total, standard ENERGY STAR required.
Insulation and air sealing materials: no item-specific cap beyond the $1,200 overall limit; must meet International Energy Conservation Code standards in effect two years before the installation year.

Labor does not count for windows, doors, or insulation. Only the material costs qualify for these items, which is the opposite of how it works for heat pumps and HVAC equipment.¹

Electrical Panels and Home Energy Audits

Upgrading your electrical panel, subpanel, branch circuits, or feeders to support new efficient equipment qualifies for up to $600 under the $1,200 cap. A home energy audit qualifies for up to $150, also under the $1,200 cap, provided the auditor is certified through a program listed by the Department of Energy and provides a signed written report.¹

What the Tax Credit Does Not Cover

Standard refrigerators, freezers, clothes washers, and non-heat-pump clothes dryers are not eligible for the Section 25C credit. This catches people off guard, because these are large energy users, but the federal credit does not cover them. Electric stoves and cooktops are also excluded from the tax credit, though they may qualify for a HEAR rebate. New construction does not qualify at all; only existing homes used as your residence (including a second home) are eligible. You do not have to own the home to claim the credit if you paid for the improvement yourself.⁵

Appliances and Equipment That Qualify for HEAR Rebates

HEAR covers a narrower list than the tax credit but pays much more, especially for lower-income households. Households below 80 percent of the area median income can receive rebates covering up to 100 percent of project costs. Households between 80 and 150 percent of AMI are capped at 50 percent of costs. The maximum combined rebate is $14,000 per household.²

Eligible upgrades and their per-item maximums:

Heat pump for space heating and cooling: up to $8,000
Heat pump water heater: up to $1,750
Electric stove, cooktop, range, or oven: up to $840
Electric heat pump clothes dryer: amount varies by state
Insulation, air sealing, and ventilation: up to $1,600
Electrical load service center upgrade: up to $4,000
Electric wiring: up to $2,500

All appliances purchased under HEAR must carry ENERGY STAR certification, with the exception of electrical panel upgrades and wiring, which have no efficiency requirement.² The program is designed as an instant discount at the point of sale through a participating contractor, not a reimbursement, though the exact mechanics depend on your state.

Efficiency Standards Your Equipment Must Meet

A model in the right category is not automatically qualifying. Each type of equipment has a certification threshold, and a unit that misses it gets nothing regardless of price.

Heat pumps, central air conditioners, furnaces, boilers, and conventional water heaters must meet or exceed the CEE’s highest efficiency tier (excluding any advanced tier) in effect at the start of the installation year. The practical way to verify this before you buy is to confirm the model carries ENERGY STAR certification and meets the CEE highest tier.¹

In northern regions, look for the ENERGY STAR Cold Climate designation on heat pumps. Cold climate units must hold at least 70 percent of their heating capacity at 5°F and achieve a coefficient of performance of at least 1.75 at that temperature. Ducted split systems need a minimum SEER2 of 15.2 and HSPF2 of 8.1.⁶

Starting January 1, 2026, heat pumps eligible for rebates must use refrigerants with a global warming potential of 700 or lower under the EPA’s Technology Transition Rule. If you are buying in 2026, confirm with the manufacturer or contractor that the unit uses a compliant refrigerant, because older warehouse inventory may not.

Windows and skylights need ENERGY STAR Most Efficient, which is stricter than basic ENERGY STAR. Exterior doors need standard ENERGY STAR. Insulation and air sealing must meet IECC standards from two years prior to the installation year.¹

How to Claim the Tax Credit

File IRS Form 5695 with your federal return for the year the equipment was placed in service, not the year you paid for it. A heat pump purchased in December but installed in January belongs on the following year’s return.⁷

Starting with property placed in service in 2025, you must include the manufacturer’s four-character Qualified Manufacturer Identification Number (QMID) for each qualifying item. For products produced on or after January 1, 2026, manufacturers assign a Qualified Product Identification Number (QPIN) instead. No credit is allowed without this number, so keep the manufacturer documentation that carries it.⁸

Documentation you will need to keep with your tax records:

Purchase receipt showing date, seller, and total price with tax.
Manufacturer information listing the model number, ENERGY STAR certification, and QMID or QPIN.
Contractor invoice, if the work was professionally installed, with labor broken out from materials.
Proof of installation date, particularly when purchase and installation fall in different tax years.

How to Apply for HEAR Rebates

HEAR rebates are handled by your state energy office, not on your tax return. Where the program is active, the rebate is designed to reduce your cost at the point of sale through a participating contractor.

The general path in states with a running program:

Check program status on your state energy office website or the Department of Energy’s program page. Many states have not yet launched.
Confirm income eligibility, which typically requires recent tax returns or other income documentation showing you fall below 150 percent of area median income.
Work with a contractor trained and approved by your state’s program. Equipment bought or installed before your rebate is reserved may not qualify.
Gather model and serial numbers, ENERGY STAR certification, proof of residence, and income verification.

The approved-contractor requirement is one of the biggest differences from the tax credit, where you can use any licensed professional or, for items like insulation, do the work yourself. Verify any contractor’s status through your state energy office before signing anything.

Using Both Incentives on the Same Project

You can combine a HEAR rebate with the Section 25C credit on the same piece of equipment, but the rebate reduces the cost basis for the credit. On an $8,000 heat pump with a $4,000 rebate, the credit is 30 percent of the remaining $4,000, or $1,200. You do not get 30 percent of the full $8,000 on top of the rebate.⁹

HEAR rebates and utility subsidies are generally treated as nontaxable purchase price reductions, so you do not owe income tax on the rebate. Some state incentives may not technically qualify as rebates under federal tax law and could be taxable; the IRS has stated that amounts paid specifically through the DOE’s Home Energy Rebate Programs are treated as nontaxable.⁴

If you have to choose, the math usually favors HEAR for lower-income households. A family below 80 percent of AMI can get an $8,000 heat pump rebate covering up to 100 percent of the cost, while the tax credit for the same heat pump tops out at $2,000 and requires enough tax liability to absorb it. For households above 150 percent of AMI, HEAR is off the table and the tax credit is the only federal option.

1
Internal Revenue Service. Energy Efficient Home Improvement Credit
2
ENERGY STAR. Home Electrification and Appliances Rebate Program
3
U.S. Department of the Treasury. Coordinating DOE Home Energy Rebates with Energy-Efficient Home Improvement Tax Credits: An Explainer
4
Internal Revenue Service. Updates to Frequently Asked Questions About the Energy Efficient Home Improvement Credit and the Residential Clean Energy Property Credit
5
ENERGY STAR. Federal Tax Credits for Energy Efficiency
6
ENERGY STAR. ENERGY STAR Program Requirements for Heat Pumps – Eligibility Requirements Version 6.2
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Internal Revenue Service. Instructions for Form 5695
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Internal Revenue Service. Energy Efficient Home Improvement Credit Qualified Manufacturer Requirements
9
Department of Energy. Program Requirements and Application Instructions