Time running out to claim federal tax credits on energy-efficient improvements

Chad Warhold, owner of plumbing, heating and air conditioning company Warhold Mechanicals in North Huntingdon, is expecting to add some last-minute jobs to his calendar between now and the end of the year.

That’s because in addition to tax credits for solar energy installation, tax credits for homeowners who upgrade to high-efficiency HVAC also are set to expire.

“We’re expecting a spike once people realize the credit is going away,” Warhold said.

Tax credits extended through the federal Inflation Reduction Act were to remain in place through 2032, but were axed by the Trump administration with the passage of the current federal budget bill.

Through the end of the year, homeowners can claim up to $1,200 for general efficiency improvements such as insulation, windows and doors, and an additional $2,000 for high-efficiency heat pump systems.

“That drives people, who might be on the fence, to purchase a system sooner than later, particularly now that it’s coming to an end,” Warhold said. “We haven’t seen much yet because it was just recently announced that it was going away.”

Among the budget cuts in what President Donald Trump called his “big, beautiful bill” was the elimination of a wide array of grants and subsidies for energy-efficiency upgrades.

The cuts also come amid rising energy costs nationwide, which have gone up 5.5% over the past year, according to the U.S. Bureau of Labor Statistics.

“We do water heaters as well, and there’s a $600 credit that’s going away for that, along with the $2,000 credit for high-efficiency heat pump systems,” Warhold said. “I think doing away with the credits only hurts. That’s money out of consumers’ pockets that could be used for other purchases that help boost the (gross domestic product).”

In 2023, 3.4 million American families took advantage of the credit, saving $8.4 billion according to U.S. Treasury Department data. That includes more than 158,000 Pennsylvania families, according to the Internal Revenue Service. Some form of the federal tax credit has been available since 2005.

Dave Marghella, owner of regional HVAC company Fire & Ice Heating and Air along Route 119 in Hempfield, said the credits expiring don’t figure much into his outlook for the remainder of 2025, “but obviously it will hurt the consumer more. You have to have heating and AC.”

“The tax credits help,” Marghella said. “The thing with HVAC is, if it’s not broken, people usually aren’t thinking about it. But if you are thinking about it, having the credit makes that decision a little easier.”

Homeowner and small-business tax credits for solar installation and battery storage also will expire at the end of the year.

Ben Delman, spokesperson for Solar United Neighbors — which helps coordinate groups of homeowners to arrange the bulk purchase and installation of solar panels — said it may be too late for newcomers to take advantage of the solar credit.

“You need to have your upgraded system installed and ready to connect by the end of the year in order to claim it,” Delman said. “I think there was an upswing in interest when the bill was passed, but installers are very busy right now. By the time you get your panels, get an installer, get the permits, you’d be running right up against (the deadline).”

The elimination of the tax credits also could affect the future business plans for the companies that supply high-efficiency HVAC systems, Warhold said.

“Manufacturers are seeing the writing on the wall,” he said. “They’ve been producing these higher-end systems in bulk and they’re adjusting their production based on these credits going away.”

According to data from the Air Conditioning, Heating & Refrigeration Institute, air conditioner shipments in the U.S. have dropped by 13% from May 2024 to May 2025 and taken together, shipments of central air conditioners and air-source heat pumps fell by 5.4% over the same time period.