If you’ve been holding off on replacing your old furnace, 2025 might be the year to take the leap. Thanks to federal tax credits, rebates, and rising efficiency standards, upgrading your heating system now can mean long-term comfort and serious savings. Let’s break down the "whys", the "hows", and the "what nows", in simple terms every homeowner can understand.
Topics Covered:
- Why 2025 Is a Breakthrough Year for Furnace Upgrades
- Federal Tax Credits You Can Claim
- Stacking State, Utility & Manufacturer Rebates
- Efficiency Requirements for 2025
- Steps to Maximize Your Savings
- Other Benefits of Upgrading Now
- The Verdict
Why 2025 Is a Breakthrough Year for Furnace Upgrades
In 2025, homeowners can take advantage of a rare confluence: enhanced federal tax credits, plenty of additional rebates, and stricter efficiency standards that ensure you get a longer-lasting, cost-saving system. Put it all together—and upgrading makes more sense than ever before.
Federal Tax Credits You Can Claim
According to the IRS, through 2025, the Energy Efficient Home Improvement Credit (Section 25C) gives you 30% back on qualifying furnace installations, up to $600 per year for furnaces and boilers, and up to $3,200 annually across all eligible upgrades. These credits apply to both equipment and labor costs, as long as your furnace meets energy-efficiency standards and is installed in your primary residence.
Note: According to Kiplinger, the “One Big Beautiful Bill” passed in July 2025 may accelerate the expiration of these credits—many could end as early as December 31, 2025—so acting now is key.
Stacking State, Utility & Manufacturer Rebates
On top of federal incentives, The Furnace Outlet tells us that many states and utility companies offer additional rebates, often ranging from $200 to over $1,000 for ENERGY STAR-certified, high-efficiency furnaces.
Want to find your local offers? Use the ENERGY STAR Rebate Finder to check zip-code–specific incentives!
Efficiency Requirements for 2025
To qualify for these credits and rebates in 2025, your furnace needs to be ENERGY STAR-certified and meet high-efficiency thresholds—typically 97% AFUE or higher for gas furnaces.
Additionally, IRA incentives in 2025 only apply to systems carrying the ENERGY STAR Most Efficient badge, underlining the push for cleaner, high-performance heating.
Steps to Maximize Your Savings
- Choose qualifying equipment—look for ENERGY STAR certified furnaces with 97% AFUE or better, such as The Peak Series Deluxe Furnace
- Use a licensed contractor—most rebates and credits require professional installation.
- Gather documentation—keep invoices, AHRI or ENERGY STAR certificates, and equipment model info.
- Apply early—some rebates expire quickly, and federal credits only apply in the year of installation.
- Stack smart—combine federal tax credits with local rebates and manufacturer offers for maximum value
Other Benefits of Upgrading Now
- Lower energy bills long-term thanks to a more efficient system.
- Increased home comfort—more consistent heating, quieter operation.
- Higher resale value—homebuyers value modern, energy-efficient HVAC systems.
- Reduced environmental impact—less fossil fuel use and lower emissions.
The Verdict
2025 is shaping up to be one of the best years to invest in a new furnace. Between generous federal tax credits, rebates from utilities and manufacturers, and tight efficiency standards, you’re set up for both immediate savings and long-term benefits. Just be sure to act before credits start disappearing at year-end.
Call Peak Heating and Cooling at (616) 207-3434 to get a licensed contractor who installs Energy Star-certified, high-efficiency furnaces. Your savings and cozy future await!
