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Tax credits for homeowners who upgrade to high-efficiency heating, ventilation, and air conditioning (HVAC) systems in the US are set to expire by the end of the year, which could lead to a surge in last-minute installations. These tax credits, which were part of the federal Inflation Reduction Act and initially designed to last until 2032, were removed by the Trump administration with the passage of the current federal budget. In 2023, these credits helped 3.4 million American families save $8.4 billion, according to US Treasury Department data.
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Homeowners Expected to Rush HVAC Upgrades as Federal Tax Credits Set to Expire
Proprietor of North Huntingdon-based Warhold Mechanicals, Chad Warhold, predicts a potential influx of last-minute jobs in plumbing, heating, and air conditioning before the year ends. The cause of this rush is the impending expiration of federal tax credits for homeowners who upgrade to high-efficiency HVAC systems, in addition to solar energy installation.
“We’re anticipating a surge as the public becomes aware of the credit’s disappearance,” commented Warhold. These tax credits were initially extended by the federal Inflation Reduction Act to remain until 2032, but the current federal budget bill overseen by the Trump administration has discontinued them.
Homeowners can claim up to $1,200 for general efficiency enhancements, which include insulation, windows, and doors, plus an extra $2,000 for high-efficiency heat pump systems until year’s end. According to Warhold, the upcoming expiration may prompt hesitant consumers to acquire a system faster. He added, “We haven’t seen much action yet as the announcement about the credit’s discontinuation has just been made.”
Federal Budget Bill and Its Implications
President Donald Trump’s “big, beautiful bill”, as he named it, has led to cutting a broad spectrum of grants and subsidies designated for energy-efficiency improvements. This comes alongside a nationwide increase in energy costs, which has risen 5.5% over the past year as per the U.S. Bureau of Labor Statistics.
Warhold elaborated, “We offer water heaters as well, and there’s a $600 credit for that which is going away, in addition to the $2,000 credit for high-efficiency heat pump systems. I believe discontinuation of the credits causes harm. That’s money taken out of consumers’ pockets that could be used for other purchases to stimulate the GDP.”
In 2023, 3.4 million American families availed of the credit, resulting in $8.4 billion savings based on U.S. Treasury Department data. This includes over 158,000 Pennsylvania households, the Internal Revenue Service states. A version of the federal tax credit has been accessible since 2005.
Owner of regional HVAC company Fire & Ice Heating and Air, Dave Marghella, expressed that the credit’s expiration isn’t significant to his projections for the remainder of 2025, but it will invariably impact consumers more. He said, “You have to have heating and AC. The tax credits aid. With HVAC, if it’s not faulty, people don’t usually ponder over it. However, if you are deliberating on it, having the credit does make the decision-making process somewhat easier.”
Solar Installation Tax Credits Expiring Too
By year-end, homeowner and small-business tax credits for solar installation and battery storage will also cease. Ben Delman, representative for Solar United Neighbors — an organization assisting groups of homeowners in organizing bulk purchase and installation of solar panels — warns that it might be too late for new entrants to tap into the solar credit.
Delman explained, “You need your upgraded system installed and ready to connect by the end of the year to qualify for the claim. I think there was a spike in interest when the bill passed, but installers are swamped at the moment. By the time your panels arrive, you find an installer, and secure the permits, you’d be pushing against the deadline.”
The termination of the tax credits could potentially affect the strategic business operations of companies supplying high-efficiency HVAC systems, warned Warhold. He mentioned that “manufacturers are interpreting the signs. They’ve been producing these high-end systems in large quantities and they’re adjusting their production based on the credits’ discontinuation.”
Statistics from the Air Conditioning, Heating & Refrigeration Institute indicate a 13% drop in air conditioner shipments in the U.S. from May 2024 to May 2025. The combined shipments of central air conditioners and air-source heat pumps declined by 5.4% over the same period.
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