For the average consumer in Tolleson, AZ, choosing the ideal HVAC equipment comes down to striking the right balance between upfront and long-term costs. We’d all love to choose the most energy-efficient HVAC option available, but doing so will often add significant cost. The good news is that there are opportunities through which you can mitigate that additional investment.
What Is the Energy Efficient Home Improvement Credit?
The Energy Efficient Home Improvement Credit is a federal tax credit. It’s available to all homeowners who make qualified energy efficiency improvements to their primary homes. The credit covers but isn’t exclusive to HVAC equipment. The total credit available is $3,200 a year, and there is no lifetime limit on how much you can claim. The amount you can claim for any one qualified improvement is 30% of the project cost.
The federal government has also established limits based on product categories. The limit for heat pumps and biomass boilers, for instance, is $2,000. The limit for air conditioners and natural gas furnaces is $600. There is also a limit of $1,200 for home improvements beyond major appliances. This is notable because it includes up to a $150 credit for a home energy audit. Homeowners may want to schedule an audit in advance of deciding which HVAC system is best for their homes.
Is the Energy Efficient Home Improvement Credit New?
The U.S. established the Energy Efficient Home Improvement Credit through the Inflation Reduction Act of 2022. The credit went into effect on January 1, 2023. It’s currently available through December 31, 2032. The federal government has the option to extend the credit. It also has the option to expand the credits available but not reduce them.
Is the Federal Tax Credit Refundable?
The Energy Efficient Home Improvement Credit is not refundable. This is an important concept for homeowners to understand when factoring it into their budgets. Being nonrefundable means that you cannot earn money on the tax credit. You can only offset owed taxes.
Can You Claim the Credit Multiples Times a Year?
Yes, you can claim the credit multiple times for qualified projects. If you had a home energy audit performed in advance of your HVAC replacement, you could claim credit for it. You could then claim credit for not only your heat pump but also the auxiliary condensing gas furnace. Even if you had the furnace and heat pump installed at the same time, you could claim them for both. Overall, limits still apply.
What Is an HVAC Rebate?
A rebate is different than the tax credit discussed above. A rebate is a financial incentive. Federal, state, and local governments offer HVAC rebates. Manufacturers do as well. You may also have access to rebates offered by your local utility company or nonprofit organizations. Once you purchase the product, you submit the rebate. Then, you receive a refund for the specified amount.
High-Efficiency Electric Home Rebate
Congress passed the High-Efficiency Electric Home Rebate Act (HEEHRA) in 2022. HEEHRA is a rebate program available to low- and moderate-income homeowners. The goal of the program is to help homeowners upgrade their electrical systems. You can claim the rebate on upgrades to the electrical system itself and appliances. This is particularly notable regarding HVAC equipment because the rebate for heat pumps is $8,000, which is significant. The Department of Energy (DOE) will make the rebate available at the state level. The DOE expects to begin rolling out rebates in the second half of 2024. The rebate will be available to all eligible homeowners by January 1, 2025, at the latest.
Homes Rebate Program
Congress passed the Homes Act in 2022. It applies to homeowners upgrading from a central HVAC system to a multi-zoned mini-split heat pump. The rebate is worth 30% of the project cost, up to $2,000. This rebate may be available to you in addition to the HEEHRA rebate. Plus, claiming any rebate, or even multiple rebates, does not affect your tax credit eligibility.
Energy Star
Energy Star is a consumer-oriented program run by the DOE and the Environmental Protection Agency (EPA). There are many facets to the program. One of the most notable is Energy Star certification for HVAC equipment and other products. If an HVAC product has an Energy Star label, you know that it’s among the most energy-efficient options on the market. There are also many additional rebates available specifically for Energy Star products.
Local HVAC Experts in Tolleson
If you’d like to learn more about HVAC incentives, El Indio AC is here to help. We provide our services in Tolleson and throughout the entire West Valley area. That includes the installation, maintenance, and repair of furnaces, air conditioners, heat pumps, and ductwork. Call today or contact us online with any questions about our services or to schedule an appointment.
