I live in IN. Was looking at replacing my HVAC system. Was wondering how tax credits would affect my return. If its worth the extra cost for the more efficient system.

[dunn-aaron-c]

How much is the credit worth and if you get a refund each year, does it make a difference in your return. Trying to determine if it is worth the extra cost to go to the 16 seer system or not.

[Opus 17]

Your refund is irrelevant, what counts is your tax liability, what the government keeps over the year.  For example, if you have $5000 of withholding and get a $1000 refund, your tax liability was $4000.  The energy credit can't be more than your tax liability.

The credit is 30% of the cost, assuming you meet the efficiency requirements, up to certain maximums.

For central A/C, or efficient gas or oil furnace, the credit is 30% up to a maximum of $600 for each component (a traditional system might include both A/C and furnace, they are listed separately and separately eligible.  For a heat pump system or biomass system, the credit is 30% with a maximum of $2000. 

Read the instructions and make sure the system you want to buy meets the requirements.  "Energy Star" is not enough, the rules are more specific.

https://www.irs.gov/forms-pubs/about-form-5695

[SteamTrain]

Certainly, it depends on your individual circumstances.

..BUT the fact you get a refund every year isn't critical...what matters is if you get ALL your prior withholding returned every year.   i.e. if you have (say) $5000 of federal total withholding from your pay, and you normally get $1000 refunded.....that means you still let the Feds keep $4000 of the total you prepaid thru withholding......the (30% of cost up-to $600) credit is used against those $4000 that remain, so you'd get $600 more refunded.  However, if you always get ALL your withholding back without that credit, then you don't get any more. 

It's called a non-refundable credit for situations where a person normally didn't really have to pay anything (or owe anything) in the first place.

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Beyond that, it still may be worth it.  In the years beyond where I went from a SEER 10, OEM AC unit to a SEER 16 SEER scroll compressor, my summer electric usage dropped ~33%  (monthly ~900 kwh to 600kwh) AND I was using 2degrees lower daily setting too.   Not only that, but the scroll compressor was far quieter too...such that I could actually have conversations with family on my patio when it was running.