Federal Tax Credits for Energy-Efficiency Home Upgrades

When it comes to keeping your home comfortable throughout the year, one of the best tools at your disposal is an efficient, reliable HVAC system. Fortunately, there are now new federal tax credits for energy-efficient HVAC equipment and home upgrades to help you save even more. These credits can be used to recoup some or even all of the costs necessary for new and replacement installation.

At Home Heating & Cooling, we are committed to helping you make the most of valuable rebates. Read on to learn more about federal tax credits for high-efficiency HVAC systems and other home upgrades.

Federal Tax Credits for Energy Efficiency Home Upgrades

Upgrading your HVAC system and making other energy-efficient improvements to your home will ensure you’re eligible for these federal tax credits. These credits, part of the Inflation Reduction Act of 2022, offsets some or all the installation costs. The price of installation can be as high as $8,000 for equipment like high-efficiency heat pumps. A key goal of the Inflation Reduction Act is to help more homeowners access equipment and upgrades that help generate long-term savings.

There are currently two programs for energy-efficient home improvements: the Energy Efficient Home Improvement Tax Credit (25C) and the High Efficiency Electric Home Rebate Program (HEEHRP). We’ll review them both, with details about eligible equipment and total potential rebates.

Energy Efficient Home Improvement Tax Credits (25C)

The Energy Efficient Home Improvement Tax Credit (25C) was first launched in 2022 and received an extension for 2023. It provides federal tax credits of up to $500 for installing high-efficiency equipment. This program has been amended for 2023 and extends all the way through 2032. While it cannot be combined with other federal programs, there are also no income requirements.

Eligible equipment includes heat pumps, heat pump water heaters and energy-efficient HVAC systems including furnaces, boilers and central AC. The 25C credit has an annual cap of $1,200 (except for heat pumps). This means you can receive up to $600 each for qualifying air conditioners or gas furnaces with an annual cap of $1,200. You are also eligible to receive up to $2,000 with a qualifying heat pump, heat pump water heater or boiler.

High-Efficiency Electric Home Rebate Program (HEEHRP)

The High-Efficiency Electric Home Rebate Program (HEEHRP) appropriates $4.5 billion from the U.S. government for state energy offices to administer within the rebate program. HEEHRP provides HVAC rebates of up to $14,000 per household for installing ENERGY STAR®-qualified heat pumps, electrical panel upgrades, home insulation and sealing, and electrical wiring improvements.

Your eligibility and the total possible rebate depends on the household’s income. If your household is below 80% of the area median income, you qualify for 100% of the system purchase price. For households falling within 80% to 150% of median income, 50% of the system is covered by the rebate. Also, you are not eligible for the rebate if the total income is above 150% of the median.

The duration of the program depends on the available funds within each state as well as the total number of rebates distributed.

Check Available Certification Statements to Determine Eligibility

If you're interested in taking advantage of these tax credits, be sure to review the available certification statements. Home Heating & Cooling offers a broad range of ENERGY STAR® qualifying products that meet eligibility for these programs. Explore the certificate links below to see if your equipment qualifies and download the certificate for when you file your tax:

Find Local Ways to Save with Home Heating and Cooling

In addition to federal tax credits, you may also be eligible for additional rebates in O’Fallon, IL. Contact comfort specialists like Home Heating & Cooling for all the details. To get in touch, give us a call at 618-416-0111 today!
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