HVAC Upgrades At Tesoro And The 25C Tax Credit

Is your Tesoro home’s AC showing its age? With Phoenix heat and rising energy bills, an HVAC upgrade can feel urgent. The Energy Efficient Home Improvement Credit, often called the 25C credit, can offset part of your cost, and local utility rebates can help too. In this guide, you will learn what qualifies, key deadlines for 2025, how SRP or APS rebates fit in, and the steps to take in a Tesoro community. Let’s dive in.

25C credit in 2025: what it covers and when it ends

The 25C credit generally equals 30% of qualifying costs, subject to annual caps and product rules. It applies to a taxpayer’s principal residence when the right efficiency levels are met and the item is placed in service in the eligible window. See the statute for the credit structure and categories in 26 U.S.C. §25C.

• The general annual cap is $1,200 for most improvements.
• Certain equipment has its own $2,000 annual cap, including heat pumps and heat pump water heaters.
  Details on annual limits and categories are in IRS guidance for 2024 and 2025 (IRS Internal Revenue Bulletin).

A new federal law changed timing. To claim the 25C credit as described in 2025, qualifying property must be placed in service by December 31, 2025 (Congress.gov summary of H.R.1). You claim the credit using IRS Form 5695 for the tax year the equipment is installed and operational. Keep invoices and manufacturer paperwork (Form 5695 information).

HVAC items that often qualify in Tesoro

• Heat pumps. Eligible systems fall under the separate $2,000 cap and can include both equipment and installation costs. For 2025, the IRS requires specific manufacturer and product IDs. See current IRS rules on qualified manufacturers and product PINs (IRS IRB 2024-46).
• Central air conditioners. When efficiency thresholds are met, central AC can qualify under the general $1,200 cap. Efficiency standards reference CEE, ENERGY STAR, or IECC criteria (IRS IRB 2022-43).
• Heat pump water heaters. These count toward the separate $2,000 cap and may also get a local utility rebate.
• Insulation and air sealing. Materials and installation can qualify when they meet IRS criteria. Windows and doors must meet the stated efficiency tiers (IRS IRB 2022-43).

The new IRS PIN rule: verify before you buy

For qualifying property placed in service after December 31, 2024, the IRS requires two things:

• The product must be made by a registered qualified manufacturer.
• You must have the product identification number, often called the PIN, and report it on your tax return.

Before you order equipment, ask your contractor to provide the exact model number, the manufacturer’s qualified status, and the product’s PIN in writing. Keep copies of labels, invoices, and any manufacturer statements. The IRS outlines the PIN and qualified manufacturer rules in current guidance (IRS IRB 2024-46).

Local rebates: SRP and APS

If your Tesoro home is in SRP territory, the Cool Cash program offers rebates for central AC, heat pumps, and mini splits, often scaled by tonnage and compressor type. Total rebates can reach about $1,125 for high-efficiency systems, and SRP also lists a $500 rebate for ENERGY STAR heat pump water heaters. Review current amounts and contractor requirements on the SRP rebate page.

If your home is in APS territory, common rebates include $250 for duct repair or sealing, $250 for insulation, AC upgrade rebates in the low hundreds, and a smart thermostat rewards program. See the APS rebates page for current amounts and steps.

Rebates typically reduce your net cost, which may reduce the costs eligible for the federal credit. Many programs require pre-approval. Confirm rules with the utility and a tax professional, and review the application timelines on the SRP page.

Permits and HOA steps for Tesoro owners

There are multiple Tesoro communities across Maricopa County, and many are condos or townhomes with HOAs. Exterior condensers, roof access, or shared components can be common elements that require HOA approval. Review your CC&Rs and confirm who is responsible for equipment replacements and what documentation is needed.

Permit rules vary by city and county. Maricopa County lists mechanical permits for HVAC and AC on its residential permit pages. Check your jurisdiction’s requirements and coordinate any inspections or approvals early (Maricopa County permit information).

Your 7-step plan to protect savings

1. Confirm your utility. Identify if your home is served by SRP or APS. Participating contractors are often required for rebates.
2. Check HOA rules. If you are in a condo or townhome, review CC&Rs to understand approval steps and who owns exterior equipment.
3. Verify the PIN and manufacturer. Ask for written proof of the qualified manufacturer and product PIN, and keep it with your records.
4. Confirm efficiency. Ensure your chosen equipment meets the CEE, ENERGY STAR, or IECC criteria referenced by the IRS.
5. Pre-apply for rebates. Get contractor confirmation and any pre-approvals required by SRP or APS (SRP Cool Cash overview).
6. Install and document. Save invoices that separate equipment and labor and show the model and PIN. Keep any utility checklists and city or county inspection records.
7. File Form 5695. Claim the credit for the year the system is placed in service and retain all documentation.

Deadlines to know

• December 31, 2025: Last day to place qualifying property in service and still claim 25C under the 2025 law change (H.R.1 summary).
• After December 31, 2024: The PIN and qualified manufacturer rules apply to specified property for 25C reporting (IRS IRB 2024-46).

Why upgrades can help resale in Tesoro

Energy-efficient HVAC can reduce operating costs, improve comfort, and make your listing more competitive in a heat-driven market. Buyers value modern systems and clear documentation of improvements. If you plan to move within the next few years, upgrading now can improve everyday living while supporting future marketability.

Ready to talk strategy for your home sale or purchase in Tesoro and nearby Grayhawk communities? Reach out to Darren Tacket - The Grayhawk Group - eXp Realty to discuss how smart improvements and timing can support your goals.

FAQs

Can I still claim the 25C credit for a December 2025 HVAC install?

• Yes, if the system is placed in service on or before December 31, 2025 and meets all IRS rules, including efficiency criteria and the PIN requirement for specified property (H.R.1 summary).

What is the IRS product PIN for HVAC and where do I get it?

• The PIN is a product identification number from a manufacturer that is registered with the IRS as a qualified manufacturer; your contractor or the manufacturer should provide it for 2025 installations (IRS IRB 2024-46).

Do Tesoro condo owners need permits or HOA approval for AC replacement?

• Often yes; check your CC&Rs for HOA rules and confirm any city or county permit steps before work begins (Maricopa County permit information).

How do SRP or APS rebates affect the federal credit amount?

• Utility rebates reduce your net cost and may reduce the basis used to calculate the federal credit; many programs also require pre-approval, so confirm rules with the utility and your tax professional (SRP rebates, APS rebates).

Which tax form do I use to claim the 25C credit for my Tesoro home?

• Use IRS Form 5695 for the year your qualifying equipment is placed in service and keep all invoices and manufacturer documentation (Form 5695 information).