Every year, homeowners gain access to rebates and credits that can reduce their taxable income and help them save money. While tax laws are routinely updated to introduce new rebates and modify existing ones, the current tax credits are set to last until 2032. If you upgrade your HVAC system or improve your home’s energy efficiency, you may qualify for one or more of these credits.
Understanding the Inflation Reduction Act
In late 2022, the Inflation Reduction Act was passed by Congress and signed into law by President Biden. While this bill focused on everything from lowering drug prices to improving the Affordable Care Act, the most significant changes involved climate protection funding.
The Inflation Reduction Act provides substantial tax rebates and credits for the installation of new HVAC equipment. You may also qualify for these rebates if you’re upgrading the system that’s currently in your home. The largest rebates are available to homeowners who obtain mini-split heat pump units. The main tax benefit that homeowners have access to is the Federal Energy Tax Credit.
Rebates for Energy Efficient Upgrades
You may qualify for tax season rebates if you install a product that comes with an ENERGY STAR label. These labels are only affixed to products that undergo rigorous testing and can help homeowners save money and energy. If you bought a central air conditioning system that came with an ENERGY STAR label, you qualify for a tax credit of $300. The same amount is available to people who installed efficient air-source heat pumps in 2023.
If you purchased an advanced main air circulating fan that’s part of a furnace, you can qualify for a tax credit of $50. However, the fan can only use 2% or less of the furnace’s total energy. Oil, propane, and natural gas furnaces qualify for a $150 rebate if they have an ENERGY STAR label.
If you bought a non-solar water heater in 2023, the tax rebate is $300. ENERGY STAR labels are only attached to water heaters with an energy factor of at least 2.2. If, however, the water heater is an oil, propane, or gas unit, the rebate is available for all systems with an energy factor of at least 0.82.
Rebates for Home Improvements
You can also obtain rebates for specific home improvements that you made in 2023. These improvements must relate to your home’s envelope, which extends to the windows, doors, and outer walls. For example, a rebate of up to $200 for windows and $500 for doors is available for units that contain the ENERGY STAR label. Skylights also qualify for this credit.
If you added insulation alongside an HVAC upgrade, you may qualify for a rebate that covers 10% of the price for a maximum credit of $500. Installation costs are included in this total. The types of insulation products that qualify include rolls, blow-in fibers, batts, expanding spray, and rigid boards.
How to Claim Credits and Rebates
To obtain tax credits and rebates for the efficient improvements you made to your home in 2023, you’ll need to fill out and file IRS Form 5695 alongside your tax return. These credits are deducted directly from the taxes you owe. The energy-efficient home improvement credit can be applied to the home where you live the majority of the time. Keep in mind that your property needs to be in the U.S. This rebate doesn’t apply to newly constructed homes.
Unlike some tax credits, this one doesn’t come with a lifetime dollar limit. You’re able to claim the full annual credit each year if you make specific improvements to your home. Since these credits are nonrefundable, you won’t be able to earn more from them than what you owe in taxes.
You may also have access to the Residential Clean Energy Credit if you bought renewable energy systems last year. If you purchased a solar system or geothermal unit in 2023, you could qualify for an additional credit of 30% of the project costs.
If you’re considering making upgrades to your home that will improve energy efficiency, we offer reliable installation services you can take advantage of. Our team accommodates all types of heating and air conditioning units, which include everything from heat pumps to ductless AC systems. We also offer comprehensive repair and maintenance services that can help keep your HVAC system in good condition. Our suite of services includes duct cleaning, smart thermostat installation, and indoor air quality testing.
Call Apollo Heating & Air Conditioning today to schedule our installation services for your Bellevue home.
