for 2025 tax planning. I'm looking to purchase a ac heat pump system for my home looking for advise on deductions

[a082870]

form 5695 use for AC heat pump high efficiency energy credit advise

[DoninGA]

There are limits on the allowable annual credit and on the amount of credit for certain types of qualified expenses. The credit is allowed for qualifying property placed in service on or after Jan. 1, 2023, and before December 31, 2025.

The maximum credit you can claim each year is:

• $1,200 for energy efficient property costs and certain energy efficient home improvements, with limits on exterior doors ($250 per door and $500 total), exterior windows and skylights ($600) and home energy audits ($150)
• $2,000 per year for qualified heat pumps, water heaters, biomass stoves or biomass boilers

IRS website for information - https://www.irs.gov/credits-deductions/energy-efficient-home-improvement-credit

[Opus 17]

For a heat pump, the credit is 30% of the cost up to $2000. You can include costs for labor and site preparation (necessary plumbing, wiring, etc.).  It must be installed and operating before December 31, 2025.  The date you paid for it does not count either way, if you pay in 2025 and it is installed in 2026 it is not eligible, if you install it in 2025 with a loan to pay over time, you claim the whole credit in 2025.

You can claim the credit for a dwelling where you live, it does not have to be your main home. 

The unit must meet or exceed the CEE Top Tier Efficiency Standard (not including any advanced tier).  For example, if the CEE has a Tier 1, Tier 2, Tier 3 and Advance Tier for heat pump ACs, your unit must meet or exceed the requirements of Tier 3.  Not all units meet the standard and and units that do meet the standard may be considerably more expensive than average.  You can rely on the manufacturer's certification or check the CEE web site.  https://cee1.org/program-resources/tiers-and-energy-star/