Form 5695 is the IRS form for claiming residential energy credits. If you installed a qualifying heat pump by December 31, 2025, this form gets you up to $2,000 back on your taxes.
Credit Expired December 31, 2025
The 25C Energy Efficient Home Improvement Credit expired on December 31, 2025 due to the "One Big Beautiful Bill" (Public Law 119-21). If you installed a qualifying heat pump by that date, you can still claim the credit on your 2025 tax return. (IRS FAQ on Public Law 119-21)
The form looks complicated. Lots of lines, multiple parts, calculations. But for a straightforward heat pump credit, you'll only use a portion of it. Here's exactly what to fill in.
Quick Summary
- Heat pumps go in Part II, Section B, Line 29
- Enter your QMID and cost on Line 29a
- Credit is 30% of costs, max $2,000
- Final credit transfers to Schedule 3, line 5b
What Form 5695 Does
This form handles two types of credits:
Part I: Residential Clean Energy Credit (solar panels, wind, geothermal, battery storage)
Part II: Energy Efficient Home Improvement Credit (heat pumps, AC, insulation, windows)
For heat pumps, you're working in Part II. Part I is for bigger installations like solar panels.
Form 5695 Structure
Lines 1-16: Solar, wind, geothermal, battery storage
Insulation, doors, windows, skylights
Residential Energy Property
29a: QMID + cost, 29b-29h: calculations
Line 32: Final credit → Schedule 3, line 5b
Heat pumps are entered in Part II, Section B, Line 29
Before You Start: Documents You Need
Gather these before sitting down with the form:
Required Documents
- Invoice from contractor (showing equipment, labor, and installation date)
- AHRI certificate (confirming efficiency ratings)
- Manufacturer's QMID code
Good to have:
- Payment receipts
- Contract or work order
- Equipment specifications or model numbers
The invoice is most important. It should show the installation date, itemized costs, and confirm the work was completed. If your invoice doesn't clearly identify the heat pump model, get clarification from your contractor.
Part II: Line by Line
Form 5695 Part II has two sections:
- Section A (Lines 17-20): Qualified Energy Efficiency Improvements (insulation, doors, windows)
- Section B (Lines 21-32): Residential Energy Property Expenditures (heat pumps, AC, water heaters)
Heat pumps fall under Section B. Here's what you need to fill in.
Section A (Lines 17-20): Skip for Heat Pumps Only
If you only installed a heat pump, Section A doesn't apply to you. Skip directly to Section B.
Lines 17-20 cover insulation, doors, windows, and skylights. Leave these blank if you didn't install those.
Section B: Residential Energy Property
IRS Note
Section B is where heat pumps, air conditioners, and water heaters are reported. This is the section you'll complete for your heat pump tax credit.
Lines 21a-21b: Qualifying Questions
Answer "Yes" to confirm you installed qualified energy property in a US residence that you placed into service during the tax year.
Line 21c: Property Address
Enter the address where you installed the heat pump.
Line 29: Heat Pumps
This is the key line
Part II, Section B, Line 29 is where your heat pump information goes. Make sure you have your QMID ready.
Line 29a: QMID and Cost of Primary Heat Pump
This line has two parts:
- QMID boxes: Enter your manufacturer's 4-character QMID code in the boxes provided
- Cost field: Enter the cost of your most expensive heat pump
The QMID is a 4-character alphanumeric code that identifies your equipment manufacturer. Enter it exactly as shown in the IRS database or our directory.
Find your QMID using our searchable directory. Enter the brand name on your equipment, and we'll show you the correct manufacturer code.
Enter only the code, no spaces, no dashes. If your QMID is "ABCD", fill in one character per box.
Line 29b: Other Heat Pump Costs
If you installed additional heat pumps, enter their combined cost here. If you only have one heat pump, enter -0-.
Lines 29c-29f: Heat Pump Water Heaters and Biomass
These lines cover heat pump water heaters and biomass stoves/boilers. Skip if not applicable.
Line 29g: Total
Add lines 29a through 29f.
Line 29h: Heat Pump Credit Calculation
Multiply line 29g by 30% (0.30). The maximum is $2,000.
Example: $7,000 × 0.30 = $2,100. Enter $2,000 (the cap).
Tax Credit Calculator
This calculator provides an estimate. Your actual credit may vary based on your tax situation. The credit is non-refundable and cannot exceed your tax liability.
Lines 30-32: Final Credit
Line 30: Combined Total
Add line 28 (other Section B items) and line 29h (heat pumps).
Line 31: Tax Liability Limitation
Enter the amount from the Energy Efficient Home Improvement Credit Limit Worksheet. This ensures your credit doesn't exceed your tax liability.
Line 32: Your Credit
Enter the smaller of line 30 or line 31. This is your Energy Efficient Home Improvement Credit. Transfer this amount to Line 5b on Schedule 3 (Form 1040).
Transferring to Your Tax Return
The credit from Form 5695 goes to Schedule 3 (Form 1040), line 5b. From there, it transfers to your main Form 1040.
If you use tax software, it handles these transfers automatically. Just make sure the numbers carry over correctly.
Common Mistakes
Avoid These Errors
Wrong QMID format: Enter exactly 4 characters. No spaces, dashes, or extra characters.
Including non-covered costs: Ductwork and non-essential electrical work don't qualify. Only include costs directly tied to the heat pump installation.
Missing documentation: Keep your invoice and AHRI certificate. The IRS can request proof.
Forgetting utility rebates: If you got a rebate, subtract it from your costs before calculating the credit.
Using the wrong part: Heat pumps go in Part II, Section B, Line 29. Don't enter them in Part I (that's for solar and residential clean energy).
If You Have Multiple Improvements
Installing a heat pump plus new windows? Enter each type on its appropriate line:
- Windows go on Section A lines (subject to $600 limit per item type)
- Heat pump goes on Line 29 (subject to $2,000 limit)
25C Credit Limits by Equipment
| Equipment | Credit Limit | Notes |
|---|---|---|
| Heat Pump (electric) | $2,000 | 30% of cost |
| Central AC | $600 | 30% of cost |
| Gas Furnace | $600 | 30% of cost |
| HP Water Heater | $2,000 | 30% of cost |
| Windows/Skylights | $600 | 30% of cost |
| Doors (exterior) | $500 | 30% of cost |
| Insulation | $1,200 | 30% of cost |
Combined annual limit for all Part II credits: $3,200
What If My Credit Exceeds My Tax?
The 25C credit is non-refundable. It can reduce your tax liability to zero but won't generate a refund beyond what you've already paid.
Example: You owe $1,200 in federal taxes. Your heat pump credit is $2,000. You'll reduce your taxes to $0, but the extra $800 doesn't carry forward.
Note
Plan accordingly. If you typically get a large refund (meaning you've already overpaid through withholding), you'll likely be able to use the full credit.
Record Keeping
Keep these documents for at least 3 years after filing:
- Completed Form 5695
- Contractor invoice
- AHRI certificate
- Payment records
- QMID source documentation
The IRS can audit returns up to 3 years after filing (longer if they suspect fraud). Having clean records prevents headaches.
Using Tax Software
Most tax software (TurboTax, H&R Block, FreeTaxUSA, etc.) has a section for energy credits. Look for:
- "Residential energy credit"
- "Energy efficient home improvement"
- "Form 5695"
The software will ask for your costs, equipment type, and QMID. It handles the calculations automatically.
Make sure the software correctly identifies your heat pump as qualifying for the $2,000 limit (not the lower $600 limit for standard AC).
Official Resources
Download the form and instructions directly from the IRS
IRS.govBlank Form 5695 for the current tax year
IRS.govDetailed instructions for completing Form 5695
IRS.govIRS overview of the Energy Efficient Home Improvement Credit
IRS.govForm 5695 Checklist
Use this checklist before submitting:
Gather Documents
- Contractor invoice with installation date
- AHRI certificate for equipment
- QMID from manufacturer
- Payment confirmation
Complete Section B
- Answer Yes to Lines 21a-21b
- Enter property address on Line 21c
- Enter QMID and cost on Line 29a
Calculate Credit
- Add all costs on Line 29g
- Multiply by 30% on Line 29h (max $2,000)
- Complete Lines 30-32
Verify Before Filing
- Costs match invoice minus rebates
- QMID verified against our directory
- Installation date is in the tax year claimed
- Credit transfers to Schedule 3, line 5b
Download the Checklist
We've created a printable PDF checklist for Form 5695 preparation. Download it, check off items as you gather documents, and keep it with your tax records.
Download Form 5695 Checklist PDF
Getting Your QMID
Need your manufacturer's QMID? Search our directory by brand name. We index all major HVAC manufacturers and their brand aliases, so you can search by the name on your equipment and get the correct code.