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Home Energy Tax Credits and Rebates for Phoenix Homeowners

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The Inflation Reduction Act (IRA) provides incentives to homeowners who purchase new HVAC systems and make clean energy upgrades. Homeowners can save money on eco-friendly HVAC upgrades such as heat pumps, ductless mini splits, and heat pump water heaters. It’s a win-win for Phoenix homeowners–and the Earth!

The IRA has programs that offer home efficiency rebates and tax credits. There are also utility company incentives available through APS and SRP. These incentives were created to make it easier for customers to purchase energy-efficient HVAC systems and water heaters. We’ll explain what these programs mean for you and how to qualify in Phoenix, AZ. There are four programs you need to know about.

  • 25C Tax Credit
  • Utility Company Incentives

With so many opportunities for savings, it’s essential to understand how the IRA works to maximize your benefits!

Feel the Comfort You’ve Been Missing. Contact us today to learn about IRA benefits for HVAC systems and heat pump water heaters.

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How much can I save on a new HVAC system?

Contact AZ Perfect Comfort Heating & Cooling, Phoenix’s most trustworthy HVAC company, to walk you through the available incentives.

Make the Switch to a High-Efficiency Heat Pump

Heat pumps are ideal for homeowners who want to significantly reduce energy use, lower emissions, and improve their home comfort levels. Although heat pumps can be costly compared to central air conditioners and furnaces, thanks to the IRA, more homeowners will be able to purchase one. These incentives only apply to purchases made after January 1, 2023, and these programs will last through January 1, 2033.


HEEHRA provides either rebates or tax credits on the purchase of eligible ducted or ductless heat pump systems. The benefits that are available via HEEHRA are dependent on household income.

  • Low-income households: Eligible for a 100% rebate up to $8,000. A low-income household earns less than 80% of an area’s median family income.
  • Moderate-income households: Eligible for a 50% rebate up to $8,000. A medium-income household earns 80% to 150% of an area’s median family income.
  • High-income households: Eligible for a 30% tax credit up to $2,000.

In 2022, the median household income for Phoenix was about $74,568.

Under HEEHRA, homeowners can also receive a rebate of up to $1,750 by upgrading to a heat pump water heater.


While HEEHRA offers upfront rebates, HOMES offers performance-based incentives that are based on your home’s actual energy savings AFTER installation. For moderate and high-income households, the maximum rebate is $4,000. Low-income households can receive up to $8,000. The contractor will need to demonstrate energy efficiency savings in order for the homeowner to qualify.

25C Tax Credit

The 25C Tax Credit Program provides a capped 30% tax credit for home improvements that will increase your home’s energy efficiency. ENERGY STAR® certified heat pumps, heat pump water heaters, and energy audits are all eligible.

Ductless mini splits also qualify. They must be ENERGY STAR® certified or have a SEER2 rating of at least 16, an EER2 rating of at least 12, and an HSPF2 rating of at least 9.

Although HEEHRA and HOMES benefits can’t be combined with one another, a major benefit of the 25C Tax Credit is that it can be combined with either HEEHRA or HOMES. Also, this credit resets every year with a maximum of $3200 annual tax credit on home improvements.

  • Heat pumps and heat pump water heaters are eligible for 30% of the purchase and installation costs or up to a $2,000 tax credit
  • Central air conditioners are eligible for a $600 tax credit
  • Gas furnaces are eligible for a $600 tax credit
  • Home energy audits are eligible for a $150 credit

APS and SRP Incentives

APS and SRP offer rebate programs to Phoenix, AZ homeowners. These local incentives can be combined with IRA benefits! These benefits are available to SRP customers:

  • Up to $1,125 on a new energy-efficient AC
  • Up to $500 on a new ENERGY STAR® certified heat pump water heater
  • Up to $100 on smart thermostat installation
  • Up to $400 on duct repairs
  • Up to $100 on home energy audits

APS is offering a $200 rebate when you replace your old or broken air conditioner with a new one. To qualify, a participating contractor will submit the rebate form. The new AC unit must be:

  • An energy-efficient unit with a minimum of 14.3 SEER2
  • Purchased on or after January 1, 2023
  • Up to a max of five units per home

Are you ready to upgrade your home with energy-efficient systems? To maximize your savings, schedule an appointment with AZ Perfect Comfort Heating & Cooling today!

Proudly Serving the Phoenix Metro Area since 2015