Upgrading your HVAC system is a smart investment that enhances your comfort, delivers long term savings, and significantly reduces your home’s carbon footprint, making it an eco-friendly choice for the future. With the right energy incentives, homeowners can enjoy substantial savings both upfront and over the life of their HVAC equipment. These tax credits and rebates make it easier and more affordable to embrace energy-efficient solutions that lower utility bills and help create a greener future.
There are two primary types of HVAC incentives: tax credits and rebates. Tax credits can be claimed through federal or state governments, reducing the amount of tax you owe. Depending on the type, they may be refundable or non-refundable, meaning you could get some money back. Rebates, on the other hand, are offered through government programs and private organizations, allowing you to save money directly at the time of purchase or installation.
ENERGY STAR
The Department of Energy (DOE) establishes energy efficiency standards for the United States that are a legal requirement. In other words, a manufacturer’s HVAC products must meet those standards. The Environmental Protection Agency (EPA) establishes standards within the context of environmental impact. These standards are voluntary and not legally required. ENERGY STAR is a joint DOE-EPA program. Through the program, independent labs evaluate HVAC systems. Those that meet the EPA standards receive ENERGY STAR certification. Most tax credits and rebates discussed here require products with the ENERGY STAR label.
Home Energy Audits
The energy credits available through the federal government are broad. They often cap you on individual credit but allow you to take multiple credits annually and from year to year. In addition, the annual caps tend to refresh every year. You can maximize the available credits and rebates by having a prioritized plan in place. Scheduling a professional home energy audit is a good way to develop that plan, as it helps you determine where energy efficiency improvements can have the most impact. Recognizing this, the federal government even lets you claim the audit as a credit. Many local utility companies offer discounts and credits for home energy audits as well.
High-Efficiency Electric Home Rebate Act
The High-Efficiency Electric Home Rebate Act is one of the newest options available to homeowners. The federal government introduced it as part of the Inflation Reduction Act of 2022. Federal energy credits are often available in the form of non-refundable tax credits. The HEEHRA rebate, on the other hand, is different in that it’s a rebate. The only requirement is that you submit the proper documentation.
Because it’s a rebate, the federal government handles it through the states rather. That means you must check with your state for the claim process. States will accept the first claims in 2025. There’s currently enough funding for the rebate through 2033. The act also provides a path through which Congress can add funding and extend the rebate.
One purpose of this rebate is to incentivize homeowners to switch to heat pumps. That includes both air-source and geothermal heat pumps. There are two income levels in this program. Moderate-income households can claim a rebate worth up to $4,000, while low-income households can claim up to $8,000.
Energy Efficient Home Improvement Credit
The IRA of 2022 extended the Energy Efficient Home Improvement Credit through 2033. That said, this is a credit that has existed in one form or another for many decades. The government has just expanded it, renamed it, and rolled it into different acts. It’s important to note that this is a broad tax program with many different facets, including credits for appliances and solar and geothermal power.
As for HVAC, most ENERGY STAR equipment applies. That includes air conditioners, heat pumps, furnaces, and boilers. There’s a per-purchase cap. For most HVAC equipment, this includes 30% of the equipment and installation costs, up to $1,200. If you installed an AC and a furnace, you could claim the credit twice up to a total of $2,400. The annual total cap per household is $3,200.
Homeowners Managing Efficiency Rebates
As part of the IRA, the federal government also introduced the HOMES rebate. As it’s a rebate, the federal government will offer it through state-based programs. Check with your state to determine eligible purchases and how to claim the rebate. The HOMES rebate does apply to heat pumps and other HVAC equipment.
However, note that you cannot combine the HEEHRA and HOMES rebates for the same heat pump. You can claim both for different aspects of home improvement. The HOMES rebate also extends to home improvements ancillary to HVAC upgrades. Examples include new insulation and electric panel replacements.
Manufacturer Rebates
The ENERGY STAR site does list some manufacturer rebates. These are often corporate incentives from the federal government that reach the consumer through the manufacturer. The EPA will generally not have information about other manufacturer rebates. The manufacturers’ websites will often be the best source of that information. Utility companies are often a good source as well. They’ll have access to information about rebates a manufacturer is offering regionally.
Smart Thermostat Rebates and Demand Response Programs
Programmable and smart thermostats are a worthwhile investment. Through scheduling alone, a programmable thermostat can lower your HVAC bill by 10%. You cannot claim a smart thermostat through any of the federal offerings.
Still, there are many rebates for thermostats available through local utility companies, such as Berkeley Electric Cooperative. Many of these rebates are significant and will even cover the entire cost. You should also check if your utility company offers a demand response program. If it does and you choose a compatible thermostat, you can receive an additional benefit.
Learn More About Energy Incentives
Rudd Plumbing Heating & Air is a locally owned and operated HVAC & Plumbing company that’s been serving Charleston, SC, homeowners for over a decade. That includes helping them make HVAC choices that maximize the available incentives. Our technicians and plumbers are available for same-day service and around the clock for emergency services. We offer a transferable maintenance plan that can save you money while providing many other benefits.
Our technicians specialize in AC installation, ductwork, indoor air quality, furnaces, heat pumps, air conditioners, and ductless mini splits. Our plumbers specialize in camera inspections, piping, repiping, sewer repair, kitchen and bathroom fixtures, and water heaters. If you have any questions for us or would like to schedule an appointment, give us a call.
