The appliances that count toward the energy tax credit

The Energy Efficient Home Improvement Credit (also called the residential energy credit) lets you reduce your federal income tax by up to $3,200 per year for certain appliances and home improvements you install in your primary residence. The credit covers specific appliances that meet Department of Energy efficiency standards, not all energy-efficient models.

The appliances that may have access to are: heat pumps (including heat pump water heaters and heat pump clothes dryers), central air conditioners, furnaces, boilers, heat pump pool heaters, electric heat pump pool heaters, biomass stoves, and certain water heaters. Each category has specific efficiency requirements — a model must meet or exceed those standards to count. You cannot claim a credit for an appliance straightforward because it uses less energy than an older model.

The credit is available for tax years 2023 through 2032. You claim it on Form 5695 when you file your federal return. The IRS maintains a list of may have access to models on its website, and manufacturers typically label may have access to units with an ENERGY STAR or Department of Energy certification.

Key Takeaways

  • Only specific appliance types may have access to: heat pumps, air conditioners, furnaces, boilers, water heaters, and biomass stoves, and each must meet Department of Energy efficiency standards.
  • You claim the credit on Form 5695 attached to your federal tax return, not through a separate process or rebate program.
  • The credit covers the cost of the appliance itself plus installation labor, up to the annual cap of $3,200 total across all may have access to improvements.
  • You need the manufacturer's certification or model documentation proving the appliance meets the required efficiency level — the receipt alone is not enough.
  • The credit applies only to your primary residence, not rental properties, vacation homes, or second residences.

What counts as installation costs

The credit covers both the appliance cost and the labor to install it. If you paid a contractor to remove the old unit and install the new one, both the equipment and labor charges count toward the credit. If you installed it yourself, you can claim only the cost of the appliance, not a value for your own labor.

The credit does not cover repairs to existing appliances, replacement of parts, or maintenance. It also does not cover the cost of any structural changes needed to fit the new appliance — for example, if you had to upgrade your electrical panel to support a new heat pump, the panel upgrade itself does not count, though the heat pump does.

The $3,200 annual cap and how it works

The total credit you can claim in any single tax year is $3,200. This cap applies across all may have access to improvements combined, not per appliance. If you installed a heat pump water heater costing $2,500 and a central air conditioner costing $2,000 in the same year, you would calculate the credit on both, but your total credit cannot exceed $3,200.

Some appliances have their own sub-caps within the $3,200 total. For example, the credit for a heat pump water heater is capped at $2,000, and the credit for a heat pump clothes dryer is capped at $2,000. A furnace or boiler is capped at $600. These sub-caps mean that even if you spent more on the appliance, you cannot claim more than the limit for that category.

If your may have access to costs exceed the annual cap, you cannot carry the unused amount forward to the next year. You claim what you can in the year you paid for and installed the appliance, and that is the end of it for that improvement.

How to verify an appliance meets the standards

Before you buy, check the manufacturer's documentation or the IRS list of may have access to models. The Department of Energy publishes efficiency requirements for each appliance type, and manufacturers must certify that their models meet those standards. An ENERGY STAR label does not automatically mean the appliance qualifies for this credit — ENERGY STAR is a separate program with different thresholds.

When you file your return, you will need to keep the manufacturer's certification, the model number, the serial number, and proof that the appliance meets the required efficiency level. The receipt showing what you paid is separate from the certification showing that it qualifies. Many manufacturers include a certification statement in the product documentation or on their website; you can also contact the manufacturer directly and ask for written confirmation that the model meets the Department of Energy standard for this credit.

If you cannot locate the certification after purchase, contact the manufacturer with the model and serial number. They can usually provide it by email. Do not assume a model qualifies based on its price or marketing language — the only proof that matters is the Department of Energy certification.

What does not may have access to

Appliances that do not may have access to include: refrigerators, dishwashers, clothes washers, ovens, ranges, microwaves, ventilation fans, and smart thermostats. Even if these appliances are highly efficient, they are not part of this credit program. Some of these categories may have been may be able to access under older credits that expired, so do not rely on prior-year information.

Portable or temporary units do not may have access to. A portable air conditioner or a space heater, even if efficient, cannot be claimed. The appliance must be permanently installed in your home.

Appliances installed in rental properties, vacation homes, or investment properties do not may have access to. The credit is limited to your primary residence — the home where you live most of the year.

Claiming the credit on your tax return

You claim the energy credit on Form 5695, which you attach to your Form 1040 when you file your federal return. The form asks you to list each may have access to improvement, the cost, the date installed, and the manufacturer's certification information. You then calculate the credit amount based on the cost and the applicable percentage or cap for that appliance type.

The credit is a non-refundable tax credit, meaning it reduces the tax you owe but cannot result in a refund if the credit exceeds your tax liability. For example, if you owe $1,500 in federal tax and your credit is $2,000, the credit will reduce your tax to zero, but you will not receive the extra $500 as a refund. Some taxpayers may be able to carry unused credits forward under certain circumstances, but this is rare and depends on your specific situation.

You do not need to file the manufacturer's certification with your return, but you must keep it with your tax records in case the IRS asks to see it. The IRS can request documentation up to three years after you file (or longer if there are other issues with your return).

State and local rebates versus the federal credit

Many states and utility companies offer separate rebate programs for energy-efficient appliances. These rebates are different from the federal tax credit and often have different rules about which appliances may have access to and how much you can receive. You can claim both the federal credit and a state or local rebate for the same appliance — they are not mutually exclusive.

If you receive a rebate, it reduces the cost of the appliance for purposes of calculating the federal credit. For example, if a heat pump water heater costs $3,000 but you receive a $500 utility rebate, your cost basis for the federal credit is $2,500. You then calculate the federal credit on that $2,500 amount.

Frequently Asked Questions

Can I claim the credit if I bought the appliance last year but installed it this year?

The credit is based on the year you installed the appliance, not the year you purchased it. If you bought it in 2023 but installed it in 2024, you claim the credit on your 2024 return. Keep documentation showing both the purchase date and the installation date.

Does a smart thermostat may have access to for the energy credit?

No. Smart thermostats are not may be able to access for this credit, even if they are ENERGY STAR certified. The credit covers heat pumps, air conditioners, furnaces, boilers, water heaters, and biomass stoves only.

What if I had a contractor install the appliance but they did not provide a receipt for labor?

You need documentation of what you paid. If the contractor gave you an invoice showing the total cost (equipment plus labor), that is sufficient. If you have only a receipt for the appliance itself, contact the contractor and ask for an invoice that breaks out the labor cost, or ask them to provide a separate invoice for the installation work. The IRS may request this documentation if you are audited.

Can I claim the credit for a furnace I replaced in my rental property?

No. The credit applies only to your primary residence. Appliances installed in rental properties, second homes, or investment properties do not may have access to, even if they meet all the efficiency standards.

If I spent $4,000 on a may have access to heat pump, can I claim the full amount?

No. The credit is capped at $3,200 per year across all improvements. Additionally, some appliances have their own sub-caps — for example, a heat pump water heater is capped at $2,000. You would calculate the credit on the $4,000 cost but cannot claim more than the applicable cap for that appliance type.