Hello @rsgandhi333 

According to the White House Fact Sheet here under the Inflation Reduction Act ,  "When families need to replace air conditioners, water heaters, or furnaces, they can save up to 30% with tax credits for efficient heating and cooling equipment that will save them hundreds of dollars on utility bills."

You will want to insure that the AC unit will be recognized as an Energy Star Most Efficient Unit. More information on Energy Star units can be found at the link here.   EnergyStar

For documentation, you will want to keep a record of your purchase through an invoice which documents the type of unit, date purchased, and cost.  TurboTax will guide you to enter in information about your AC unit so you can claim your credit under the "Credit and Deductions" section, in the "Your Home" section.

Enjoy your day!

If you install a recognized Energy Star/Alternative energy equipment  (like a certified Energy Star AC ) you can claim the Residential Energy Efficient Home Improvement credit .  The amount of the credit is $300 for air conditioner equipment  recognized as ENERGY STAR Most Efficient if installed before December 31, 2022. You can also claim 100% of the installation cost up to a lifetime limit of $500 (combined cost between equipment and installation). 

The Inflation Reduction Act increases the credit to 30 % of all costs and changes the lifetime limit to an annual limit of $600 if installed 2023.

To verify your equipment is credit eligible, ask your HVAC contractor to provide the Manufacturer Certification Statement for the equipment you plan to purchase.

A Manufacturer’s Certification Statement is a signed statement from the manufacturer certifying that the product or component qualifies for the tax credit.

Manufacturers should provide these Certifications on their website. Call the manufacturer, or search their website. EPA does not have copies of the Manufacturer's Certification Statement.

Taxpayers must keep a copy of the certification statement for their records, but do not have to submit a copy with their tax return.

If you are interested in finding more information about the Residential Energy Home Improvement credit and other energy credits included in the Inflation Reduction act , you can visit the resources listed below :

- Tax credits for energy-efficient home improvements are extended and expanded by the Inflation Reduction Act.

-  Equipment Tax Credits for Primary Residences 

- Energy Tax Credit: Which Home Improvements Qualify? 

- Energy Incentives for Individuals: Residential Property Updated Questions and Answers