New PIN rule hits HVAC tax credit: What to know

A new requirement now stands between homeowners and up to thousands of dollars in federal tax credits for upgrading their HVAC systems.

• Catch up: Homeowners nationwide can collect up to a $3,200 tax credit for installing heat pumps, and certain air conditioners and furnaces until 2032, under what’s commonly referred to as the ‘Section 25C’ tax credit. Details 

Why it matters: Of the 2.3 million tax returns claiming the credit during the 2023 tax season, totaling over $2 billion, 32 percent were for air conditioners and heat pumps.

The latest: The IRS is requiring homeowners to include a product identification number, or PIN, for each piece of qualifying equipment installed starting this year to claim the credit on future tax returns.

• Yes, but: These PINs don’t yet exist, and the Treasury Department, which oversees the IRS, hasn’t specified who will be responsible for creating them — PINs will differ from model and serial numbers.
• AHRI has proposed using its product directory as the go-to source, which it’s enhancing to generate PINs and expects to complete by the end of this quarter.
• The Treasury will soon decide, in a “final rule,” whether to accept AHRI’s proposal or designate another source.

Of note: Homeowners won’t need to claim credits for this year’s installations until next filing season, in 2026.

• Claims for last year’s installations can be made this year without PINs.

The dilemma: With no official PIN system in place, despite the requirement being active, homeowners installing equipment today may face uncertainty when seeking these numbers next tax season.

• What we’re watching: The Treasury might allow a non-enforcement period in the meantime before it finalizes its guidance, an industry association representative tells Homepros, though it remains unclear. 
• Neither the IRS nor the Treasury Department responded to a request for comment.

What’s next: The Treasury’s final guidance is expected in the coming months.