If you're a Louisville homeowner considering a new heat pump or high-efficiency air conditioner, understanding the financial incentives available can save you thousands. Certain federal tax credits expired at the end of 2025; specifically, December 31, 2025.
This means that you can still file for these tax credits so long as your qualifying HVAC system was installed before the expiration.
New SEER2 efficiency standards incentivized many homeowners in Louisville and Kentuckiana to upgrade their HVAC systems to take advantage of these tax credits.
If you are among these people, then read on for important information about these tax credits.
HVAC Federal Tax Credits Expired on December 31, 2025
To repeat, this expiration date does not signal that these tax credits cannot be enjoyed. Instead, the expiration is the cutoff date for when you must have had an eligible HVAC system installed and documented by.
If you qualify, you can claim up to 30% of equipment and installation costs on qualifying HVAC systems.
Here's what you can claim:
What Louisville Homeowners Need for Tax Filing
Starting with 2025 tax filings, the IRS requires additional documentation.
For one, you must be claiming the tax for a residence, principle or secondary. A principal residence is the home where you live most of the time. This can be a mobile home, houseboat, condo, manufactured home, co-op apartment, or just a traditional house. Also includes residents who make eligible improvements.
Property owners not living in the residence and landlords do not qualify.
Some things you need:
You'll claim the credit using IRS Form 5695 when filing your taxes. The credit is non-refundable, meaning it reduces your tax liability dollar-for-dollar. However, you can't receive more back than you owe in federal taxes.
If you have any questions, reach out to Prudential HVAC for a comprehensive rundown of the tax-filing process.
Stack Local Rebates with Federal Credits
Louisville homeowners served by LG&E (Louisville Gas & Electric) or KU (Kentucky Utilities) can access additional savings through local utility rebates.
These rebates are separate from federal tax credits and can be combined for savings.
However, be aware that rebates' savings can be subtracted pro rate from the federal credit base. In other words, the qualifying amount for your federal tax credit will be the total costs minus the rebate in effect.
LG&E and KU Residential Rebates
Currently available for ENERGY STAR–certified equipment including heat pumps, central air conditioners, and furnaces. Check with LG&E-KU for current rebate amounts, as programs are periodically updated.
For Future Reference: Kentucky Home Energy Rebates Program
Kentucky is developing a state-level rebate program funded by the Inflation Reduction Act.
This program, not yet in effect, will provide rebates for whole-home energy efficiency improvements, including HVAC upgrades, insulation, and electrical-panel upgrades.
Keep this in mind in the future, as this could be a great source of savings once it takes effect.
Why Heat Pumps Make Sense for Louisville Homes
Louisville's climate features cold winters and hot humid summers, which makes heat pumps an increasingly popular choice.
Modern heat pumps provide heating and cooling year-round, qualifying for the highest federal tax credit available.
Ductless mini-split heat pumps offer additional advantages for homes without existing ductwork. These allow for better climate control in room additions and zones requiring independent temperature control.
Common Questions Prudential HVAC Can Answer
Does the system need to be in my primary residence? It can be a secondary residence if you live in it part-time and do not rent it to others.
What if I replace my system in early 2026? Unfortunately, the current federal tax credit expires December 31, 2025. Systems installed after this date won't qualify unless Congress passes new legislation.
Do I need to pay cash, or does financing qualify? The tax credit is based on the total installation cost. Make sure you have ownership of the system if you financed the installation.
Beyond Tax Credits: Long-Term Value
Federal tax credits provide immediate savings. However, the real value of upgrading to a high-efficiency HVAC system extends beyond this tax season.
With an HVAC upgrade, Louisville homeowners can benefit from:
Even if we are now past the deadline for the 2025 tax credit's deadline, upgrading an HVAC if your existing system is nearing the end of its lifespan can lead to overall savings if you are planning on staying in your home for some time.
Get a Consultation from Prudential HVAC!
At Prudential HVAC, we've helped countless Louisville families navigate the financial benefits of tax credits, rebates, and efficiency requirements. If you are considering upgrading your HVAC system, reach out to us for information about available tax credits that you may be eligible for.
