Quick Steps to find your new residential water heater

-Replace your old water heater before it fails with an ENERGY STAR® model and help protect your finances from raising energy costs. Water heating accounts for ~20% of residential energy use.

-Claim a rebate from your electric Utility or State energy organization (where available).

-This tax year, take an option on the 30% Federal tax credit on Heat Pump or select tankless gas condensing water heaters BEFORE the tax credit expires on December 31, 2025.

What to buy, where to buy, Rebates and tax credits, energy savings, self-install help and plumbing installation services.

Step 1: Check what your have - Find the Rating plate

Step 2: The most common replacement options

Step 3: Consider an ENERGY STAR® model and take advantage of the Federal tax credits now set to expire on December 31, 2025

Replace your old water heater now before it fails……Incentives of this magnitude are not likely to come back for a long, long time:

Federal tax credits for ENERGY STAR® certified Water Heaters (see details of which models to pick below under “resources”):

https://www.energystar.gov/about/federal-tax-credits/heat-pump-water-heaters
https://www.energystar.gov/about/federal-tax-credits/water-heaters-natural-gas-oil-propane-tax-credit

“Your home’s water heater uses more energy than your refrigerator, clothes washer, dishwasher, and dryer combined!”

Source ENERGY STAR®: https://www.energystar.gov/products/energy_star_home_upgrade/super_efficient_water_heater

Step 4: Pick your fuel type; Consider electrification options

Step 5: If you Select a Heat Pump Water Heater or a Tankless Natural Gas Water heater, Check out if local Utility rebates are Available in Your State

Resources: Details on the Federal tax credit - Heat Pump water heaters

“Heat pumps that meet or exceed the CEE highest efficiency tier, not including any advanced tier, in effect at the beginning of the year when the property is installed, and biomass stoves and boilers with a thermal efficiency rating of at least 75% qualify for a credit up to $2,000 per year. Costs may include labor for installation.

Qualified property includes new:

Electric or natural gas heat pumps
Electric or natural gas heat pump water heaters
Biomass stoves and boilers”

Reference: https://www.irs.gov/credits-deductions/energy-efficient-home-improvement-credit

Pick a 240V integrated Heat Pump water heater model with a Universal Energy Factor (UEF) of 3.3 or higher. The requirement for split system and 120V 15A Heat Pump water heaters is a UEF of 2.2 or higher.
Reference CEE – Consortium for Energy Efficiency Residential Electric Water Heating Specification: https://cee1.my.site.com/s/resources?id=a0V2R00000sUQd1

For example, the 240V ACiQ® Heat Pump water heaters qualify for the Federal tax credit. The 50 Gallon model ACIQ-50-HP-WH has a UEF of 3.75 and the 80 Gallon model ACIQ-80-HP-WH has a UEF of 4.0.
Reference:
https://www.energystar.gov/productfinder/product/certified-heat-pump-water-heaters/results?formId=b16b4f32-abfa-4053-b6ed-d5c36ce41c97&scrollTo=542&search_text=&low_price=&high_price=&type2_filter=&brand_name_filter_proxy=ACIQ&brand_name_isopen=0&markets_filter=United+States&zip_code_filter=&product+types+to+select=Select+a+Product+Category&sort_by=uniform_energy_factor_uef&sort_direction=desc&page_number=0&lastpage=0&brand_name_filter=ACIQ

Consult with your tax professional if you have questions.

IRS Qualified Manufacturer (QM) codes for inclusion as needed in the Federal tax returns for tax year 2025:
-A. O. Smith: A5X5
-Midea (Manufacturer of the ACiQ Heat Pump water heaters): X7Z8

Resources: Details on the Federal tax credit - Gas water heaters

“Residential energy property that meets or exceeds the Consortium for Energy Efficiency (CEE) highest efficiency tier, not including any advanced tier, in effect at the beginning of the year when the property is installed qualifies for a credit up to $600 per item. Costs may include labor for installation”.

Qualified property includes new:

Central air conditioners
Natural gas, propane, or oil water heaters
Natural gas, propane, or oil furnaces and hot water boilers”

Reference: https://www.irs.gov/credits-deductions/energy-efficient-home-improvement-credit

-Pick a residential gas tank water heater between 20 and 55 gallons with a Universal Energy Factor (UEF) of 0.81 or higher (medium draw pattern) or 0.86 or higher (high draw pattern).
-Pick a residential gas tank water heater larger than 55 gallons with a UEF of 0.86 or higher (high draw pattern).
-Pick a residential tankless gas water heaters with a UEF of 0.95 or larger.
Reference CEE – Consortium for Energy Efficiency Residential Electric Water Heating Specification: https://cee1.my.site.com/s/resources?id=a0V7V00000Ke9Wy

IRS Qualified Manufacturer (QM) codes for inclusion as needed in the Federal tax returns for tax year 2025:
-A. O. Smith: A5X5
-Noritz: TBA

Consult with your tax professional if you have questions.