Are There Tax Rebates for New HVAC Systems?
If you’ve been following our blog for a while, then you probably know about the great savings you can take advantage of by upgrading to a new HVAC system. It’s fairly obvious that energy-efficient HVAC systems can amount to significant cost-savings on your annual energy bill. But you may be wondering about tax rebates for HVAC systems as well.
Entek has been helping customers like you save money on their utility bills for decades. The first thing to know is that some tax rebates for HVAC systems are part of federal programs and can be used nationwide. Others are state-specific and will vary according to where you reside.
For the purposes of this article, we’ll focus on federal tax rebates for HVAC systems. For that reason, the below is not a comprehensive list but a good jumping-off point for understanding which tax rebates may be available to you. We encourage you to do your own research and consult with a tax professional to determine what rebates and credits will benefit you the most.
Equipment Tax Credits
If you purchase energy-efficient HVAC equipment, you may qualify for the nonbusiness energy property credit, which has been extended through the end of 2021. To qualify for this credit, you must purchase the new equipment for an existing home that is your primary residence. New construction or a rental unit is ineligible for this tax credit. We’ll discuss an option for new constructions and secondary residences in just a bit.
If you do qualify for this credit, you will receive either a specific amount ranging from $50 to $300 or 10 percent of the equipment cost as well as reimbursement for your annual home energy costs with a maximum credit amount of $500. For instance, if you purchase an air source heat pump, central air conditioning unit, or non-solar water heater that meets the energy requirements, you could be eligible to receive a credit of $300. Energystar.gov has a good breakdown by product type of what the energy requirements are to qualify.
Gas, propane, or oil hot water boilers, furnaces, and fans could also qualify you for a $150 tax credit. An advanced main air circulating fan that uses no more than 2 percent of the furnace’s total energy qualifies for a $50 tax credit.
Prior to purchasing any new equipment, be sure to ask your HVAC contractor to provide the Manufacturer’s Certification Statement for the product you are considering. This will allow you to verify the equipment meets the tax credit’s energy requirements before upgrading. For more details on who qualifies for this credit and how to claim it on your tax return, check out the IRS instructions for Form 5695.
Qualified Energy-Efficiency Improvements
Did you know that Entek doesn’t simply help customers with their HVAC equipment needs but also assists them with whole-house energy improvements? In fact, we adhere to a whole-house philosophy so that we can maximize the energy efficiency of your entire home. Our experienced technicians can do a home performance energy test to help identify areas of improvement, which leads us to our next type of tax credit.
If you make certain energy-efficiency improvements to your home, such as adding insulation, you may be eligible to receive a tax credit for them. As an added bonus, improving your home’s insulation is one of the most cost-effective home upgrade options. If you do decide to upgrade your insulation, you may qualify for a tax credit up to 10 percent of the purchase price, excluding installation costs, with a maximum credit amount of $500.
Air sealing may also qualify you for a tax credit. But again, be sure to ask your HVAC contractor for a Manufacturer’s Certification Statement to be sure the product is eligible for the tax credit. If you’re located in the Pacific Northwest, give Entek a call. We will use two-part polyurethane spray foam to seal major air infiltration points in your home.
Renewable Energy Tax Credits
One of the great benefits of the renewable energy tax credit is that it applies to both new construction and existing homes as well as primary and secondary residences. Installing a geothermal heat pump, residential small wind turbine, solar energy system, or fuel cell could qualify you for this tax credit. New this year, you can also qualify by installing a biomass fuel stove. Energystar.gov provides a good breakdown of the energy requirements each individual system must meet in order to qualify for this tax rebate.
Another benefit of this particular tax credit is that the rebate amount includes installation costs. How much credit you qualify for will depend on the date the systems are placed in service. For systems placed in service in 2021 and 2022, you will receive a tax credit of 26 percent. For systems placed in service in 2023, you will receive a tax credit of 22 percent.
On the other hand, some of the tax rebates for HVAC systems that we’ve discussed expire at the end of 2021. Therefore, it’s important to act now if you want to take advantage of them. In addition to saving money with the tax credits we’ve mentioned, Entek also has easy financing available. We’ll work with you to find the HVAC system that’s within your budget, any tax credits that apply, and the financing option that works best for you.
You can also save $150 on a home performance energy test with us. But remember, time is of the essence. So if you’re ready to start saving money on your home energy costs and qualify for a tax credit while the opportunity is available, we’re confident we have the perfect home energy solution for you. Give us a call and we’ll help you explore your options.