HVAC Tax Credits & Rebates in New York (2026 Guide)
If you’re replacing your HVAC system in New York, you could save $500 to $3,000 or more through a combination of federal tax credits, state incentives, and utility rebates. Most homeowners don’t know these programs exist — or assume they don’t qualify. Here’s a complete breakdown of what’s available in 2026.
Federal Energy Efficiency Tax Credit (Section 25C)
The federal government offers tax credits — not deductions, actual dollar-for-dollar reductions in your tax bill — for qualifying energy-efficient HVAC equipment. These credits were expanded under the Inflation Reduction Act and are available through at least 2032.
Heat Pumps (Air-Source)
This is the biggest credit available. Air-source heat pumps that meet the ENERGY STAR Most Efficient criteria qualify. This includes ductless mini-split heat pumps — a popular choice for NYC homes. The credit covers the equipment AND installation labor, which is unusual for tax credits.
Qualifying criteria: Must meet or exceed ENERGY STAR Most Efficient designation for the year of installation. Most modern heat pumps with SEER2 ratings of 16+ and HSPF2 of 9+ qualify.
Central Air Conditioning
Qualifying central AC systems must meet ENERGY STAR Most Efficient criteria. The credit applies to the equipment cost but not installation labor (unlike heat pumps).
Qualifying criteria: Generally SEER2 of 16+ and EER2 of 12+. Check the ENERGY STAR website for the current qualifying product list.
Gas Furnaces
High-efficiency gas furnaces with AFUE of 97% or higher qualify. This is a high bar — most standard furnaces are 80 to 95% AFUE. You’re looking at premium condensing furnaces from brands like Carrier Infinity, Trane XV, or Lennox SL280V.
These are tax credits, not rebates — they reduce your federal tax liability when you file. If your tax bill is less than the credit amount, you cannot carry the excess forward to the next year. Consult a tax professional to understand how credits apply to your specific situation.
NYSERDA Incentives (New York State)
The New York State Energy Research and Development Authority (NYSERDA) runs several programs that provide additional incentives for energy-efficient HVAC upgrades.
EmPower+ Program: Income-qualified New York residents can receive free or reduced-cost energy efficiency upgrades including insulation, air sealing, and HVAC improvements. If your household income falls below 60 percent of the state median income, you may qualify for significant assistance.
Clean Heat Program: NYSERDA offers incentives for heat pump installations through participating contractors. Incentive amounts vary by system type and capacity but can range from $500 to $1,500 for residential installations. These incentives are applied at the point of sale — meaning your contractor applies the discount to your invoice.
Comfort Home Program: For whole-home energy improvements including HVAC upgrades, NYSERDA offers reduced-interest financing and cash-back incentives when you bundle HVAC work with insulation and air sealing improvements.
Utility Company Rebates
Your utility company may offer additional rebates on top of federal and state incentives. These vary by provider and change periodically, so always check current offerings before purchasing equipment.
ConEdison (NYC and Westchester): Offers rebates for qualifying ENERGY STAR certified HVAC equipment. Smart thermostat rebates of $50 to $100 are also commonly available. Check Con Ed’s Green Team program for current offers.
PSEG Long Island: Runs rebate programs for high-efficiency AC systems, heat pumps, and ductless mini-splits. Rebates typically range from $200 to $800 depending on equipment type and efficiency level.
National Grid (parts of NYC and Long Island): Offers rebates on gas furnaces, boilers, and combination heating/cooling systems. Also provides rebates for smart thermostats.
How to Stack These Savings
The best part: these programs can be combined. A single HVAC replacement can qualify for a federal tax credit, a NYSERDA incentive, AND a utility rebate simultaneously.
Total installed cost: $8,500 (multi-zone ductless heat pump)
Federal 25C tax credit: -$2,000
NYSERDA Clean Heat incentive: -$800
ConEd rebate: -$300
Your net cost: $5,400
That’s $3,100 in total savings — a 36% reduction from the sticker price. And the heat pump provides both cooling AND heating, potentially replacing your furnace costs too.
How to Claim Everything
Federal tax credit: Keep your receipt showing the equipment model number and cost. File IRS Form 5695 with your annual tax return. Your contractor should provide documentation of the equipment’s ENERGY STAR certification.
NYSERDA incentives: Most NYSERDA incentives are applied through participating contractors at the point of sale. Ask your contractor if they’re a NYSERDA-participating installer. If they are, the incentive is deducted from your invoice automatically.
Utility rebates: Check your utility company’s website for current rebate applications. Most require submitting a rebate form along with your contractor’s invoice within 60 to 90 days of installation. Some utilities offer instant rebates through participating contractors.
Ask your HVAC contractor about available incentives BEFORE choosing your equipment. A slightly more expensive high-efficiency unit might qualify for significantly larger credits and rebates, making it cheaper overall than a lower-efficiency unit that doesn’t qualify for any incentives. We always calculate the net cost after all available credits before recommending equipment.
Frequently Asked Questions
Do these credits apply to rental properties? The Section 25C credit applies to your primary residence only, not rental or investment properties. However, landlords may qualify for different commercial energy efficiency incentives.
Can I claim credits for equipment installed last year? Yes, as long as you haven’t already filed your tax return. Credits are claimed on the return for the year the equipment was installed.
Is there an income limit for federal tax credits? No income limit for Section 25C credits. NYSERDA’s EmPower+ program is income-qualified, but the Clean Heat program and utility rebates are available to all homeowners regardless of income.
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