HVAC Tax Credit & Rebates in Columbus, Dublin, and Delaware OH

Federal Tax Credit & Rebates Overview

If you are contemplating the replacement of your current HVAC system this year, you may be eligible to receive tax credits ranging from 10% to 30% of the equipment installation costs. To qualify for this credit, your system must meet specific criteria outlined in the Federal Tax Code Section 25C. This includes the installation of an Energy Star-rated heat pump on or after January 1, 2023. What Tax credits are available for HVAC equipment in 2023:

Nonbusiness Energy Property Credit Overview

The Nonbusiness Energy Property Tax Credit, is a tax credit available to home and business owners who make qualified energy-efficient improvements to their principal residences. This credit allows homeowners to claim up to a certain percentage of the cost for eligible improvements, such as high-efficiency heating and cooling systems. The Inflation Reduction Act ensures that the credit amount is adjusted for inflation, providing continued support for energy-conscious homeowners seeking to reduce their energy consumption and environmental impact.

• Availability – It is applicable for improvements placed in service between January 1, 2005, and December 31, 2032, providing an extended period for eligible energy-efficient upgrades.
• A tax credit for qualifying energy-efficient improvements made to both taxpayer’s homes or businesses properties.
• Amount – The credit is equal to 30% of the cost of the improvements, up to a maximum of $1,200 for homeowners and $500 for businesses.
• Non-refundable–  it can only be used to offset the amount of taxes owed; any excess credit cannot be refunded.
• Property – Both principal residences and rental properties are eligible for the credit, making it applicable to a wider range of property owners.
• Eligible HVAC equipment –  The credit covers various HVAC equipment, including air conditioners, heat pumps, furnaces, and boilers, encouraging energy-efficient heating and cooling solutions.
• HVAC equipment  efficiency –  Various
• Usage – Taxpayers can claim the credit one time only, so it’s important to maximize eligible improvements in a single tax year.
• Income eligibility – Eligibility for the credit is not income-based, meaning there are no specific income requirements to qualify for this tax benefit.
• IRS Info & form -To claim the Nonbusiness Energy Property Credit, taxpayers must fill out IRS form 5695, providing details of the qualifying improvements and their associated costs.

Please Note: tax laws and regulations may change over time, so it’s essential to consult the IRS or a tax professional for the latest information and eligibility criteria. See our disclaimer and advice below.

Residential Clean Energy Property Credit (25C Tax Credit) Overview

You can benefit from the Residential Clean Energy Property Tax Credit, a 30% tax credit for purchasing and installing renewable energy systems, including ductless heat pumps, for your principal residence or rental property. The tax credit is capped at $2,600 for air-source heat pumps, and to qualify, the ductless heat pump must have a Seasonal Energy Efficiency Ratio (SEER) of 18 or higher. This incentive aims to promote energy-efficient choices and encourage the adoption of renewable energy solutions for residential properties.

• Availability – The tax credit is applicable to systems placed in service between January 1, 2005, and December 31, 2032, offering an extended timeframe for eligible installations and upgrades.
• Amount – The credit is equal to 30% of the cost of the system, providing significant savings for customers. The maximum credit available is up to $2,600, making it a substantial incentive for investing in energy-efficient HVAC solutions.
• Non-refundable – The credit is non-refundable, meaning it can only be used to offset the amount of taxes owed. However, customers can carry forward any unused credits to future tax years, maximizing the benefits over time.
• Property – The tax credit is available for both principal residences and rental properties, encouraging energy efficiency upgrades across various types of properties.
• Eligible HVAC equipment – Air conditioners, Heat pumps, Furnaces, and Boilers. This broadens the scope of eligible upgrades, accommodating different heating and cooling needs.
• HVAC equipment  efficiency –  The tax credit applies to various equipment efficiencies of 18 SEER or higher, allowing homeowners to choose the systems that best suit their energy needs and budgets.
• Usage – You can utilize this tax credit only once, so it’s essential to maximize the benefit by installing energy-efficient HVAC equipment that meets your long-term requirements.
• Income eligibility – Unlike some other tax incentives, this tax credit has no income eligibility requirements. It’s accessible to all taxpayers, regardless of their income level.

IRS Info & form – To claim this tax credit, you need to complete IRS form 5695 and attach it to your annual tax return. The form will help you calculate the eligible credit amount based on the HVAC equipment’s cost and its efficiency level.

Inflation Reduction Act (IRA) Overview

The Inflation Reduction Act (IRA) represents the largest climate investment in US history, aiming to address inflation, promote clean energy, and decrease greenhouse gas emissions by 31% to 44% below 2005 levels by 2030.  The  law that was passed in 2022 extends the Nonbusiness Energy Property Credit and the Residential Clean Energy Property Credit through 2032. The law also made some changes to the credits, including increasing the maximum credit amount for homeowners and making battery storage systems eligible for the Residential Clean Energy Property Credit.

• Availability – This program is expected to be ready in late 2023 or early 2024 through 2032.
• Amount – Provides a tax credit of 30% of the cost of installing a ductless heat pump, up to a maximum of $2,000. To qualify for the heat pump must have a SEER of 18 or higher.
• Eligible HVAC equipment – Heat pumps are covered under the new legislation including Air source heat pumps and Geothermal heat pumps. For more HVAC IRA eligibility details click here.
• HVAC equipment  efficiency –  Various
• Usage – Annually.  For example, if you install a new air conditioner in 2023 and a new solar water heater in 2024, you can claim the credit for both of those items in the respective years.
• Income eligibility – Rebates and Tax Incentives defer by each state for this program. Check out this rebate calculator from Rewiring America to calculate your potential savings.
• IRS Info & form -Be sure to fill out the IRS form 5695 to claim your potential rebate or tax credits and attach to your tax return.

HOMES Act rebate program 

Under the HOMES Act, it provides rebates for energy efficiency upgrades that improve overall energy performance of single family homes or multi-family buildings. Applicants can show their savings by comparing energy usage before and after upgrades. This can be done through building energy models that estimate overall house performance or by direct measurement.

• Availability – Federal and state governments are currently still setting the program up; DOE has not provided a start date but is estimated to begin late fall 2023.
• Amount – If the improvements result in a 20%-35%  modeled savings, homeowners can receive a $2,000 rebate, and an additional $4,000 rebate for modeling exceeding 35% savings. For lower-income homeowners and building owners with lower-income occupants, these rebates are doubled to $4,000 and $8,000, respectively.
• Property – Applies to model energy savings for single and multi family homes.
• Eligible HVAC equipment -Homeowners can receive rebates for efficiency improvements, including heat pumps, based on modeled energy savings.
• HVAC equipment  efficiency –  Based on SEER and HSPF ratings, and ENERGY STAR certification
• Usage -Information for this rebate has not been released on whether it can be used only once or annually.  Combining the HEEHRP and the HOMES Act Rebate programs are not permitted. It is advised to consult with your tax professional for precise information regarding your eligibility for these programs.
• Income eligibility – Rebates available are not restricted by income, but determined by performance of the whole-home electrification and energy efficiency improvements.
• IRS Info & form – Your State Energy Office is currently determining how the program will be rolled out and specifications. Stay tuned with the DOE and State Energy Offices for more information.

What is the Inflation Reduction Act?

If you’re making an effort to start home improvement projects to increase your home’s energy efficiency, the Inflation Reduction Act could help you save money and reduce your carbon footprint. Like the automotive industry, there is a movement pushing towards advanced electric innovation to help decrease the effects of climate change, for the HVAC industry, this is called the electrification of heat. The Inflation Reduction Act (IRA)  is a federal law that was signed on August 16, 2022 by the United States congress as a 10-year program, designating a $370-billion investment to address inflation, promote clean energy, and address current climate criticism. The new federal income tax credits are accessible until 2032 and are capped annually, supplying homeowners with up to $3,200 yearly, with the hope to lower the cost of energy saving upgrades, up to 30 percent. This law provides homeowners, building owners, and contractors the ability to install and upgrade their heating and cooling systems to higher energy efficient systems in hope of reducing effects of inflation and greenhouse gas emissions. Custom Air strives to provide its customers with the chance to attain optimal home comfort,  decrease the need for non-renewable wastes, and to take advantage of the tax incentives and credits provided by the IRA to save money on upgrades and installs of qualified HVAC equipment.

What HVAC equipment/ energy upgrades are qualified under the Inflation Reduction Act?

The Inflation Reduction Act (IRA) offers opportunities for homeowners to take advantage of energy-efficient HVAC products and qualify for rebates. The eligibility of these products is expected to be based on ratings such as SEER, HSPF, and EER, which measure their energy efficiency.