If your HVAC system is nearing the end of its lifespan or can’t seem to keep up with the changing California weather, it might be time to start thinking about an upgrade. While the initial investment of a new HVAC unit might seem daunting, there are plenty of ways to save on your new heating or cooling system. With the new HVAC system tax credit, local rebates, and incentive programs, you can keep your out-of-pocket costs to a minimum, helping you upgrade to a high-efficiency system without breaking the bank.
What Is the New HVAC System Tax Credit?
As a part of the Inflation Reduction Act, California homeowners who install a high-efficiency heating or cooling system in their primary residence before December 31, 2032, are eligible to receive a tax credit that reduces their overall liability. The credit covers:
- 30% of the cost, up to $2,000 for heat pumps
- 30% of the cost, up to $600 for central air conditioners
- 30% of the cost, up to $600 for furnaces
This credit was put in place to promote energy-efficient home improvements, helping homeowners save on HVAC installation costs and reduce their carbon footprint. To be eligible for the credit, you must:
- Pay federal income taxes in the United States
- Make improvements to your primary residence
- Upgrade the system in an existing home or addition, not a new construction
What HVAC Systems Qualify for Tax Credits in California?
Your new HVAC system must meet specific efficiency regulations to qualify for the tax credit. The eligible systems include:
- High-efficiency heat pumps
- Central air conditioners
- Some ductless mini-split systems
- Advanced efficiency furnaces
- Geothermal heat pumps
When selecting a unit, look for ENERGY STAR® certified systems with ratings of:
- AFUE rating of .90 or higher for furnaces
- SEER 2 of at least 15.2 for heat pumps
- SEER 2 of at least 16 for air conditioners
Tax Credit for HVAC Replacement: How Does it Work?
The HVAC system tax credit is a dollar-for-dollar reduction on the amount of income tax you owe. For example, if you receive a credit of $2,000 for installing a qualifying heat pump, you’ll reduce the amount you owe in income taxes by $2,000. After replacing your HVAC system with a new, high-efficiency unit, you can claim this credit when you file your tax return the following year. Your eligible credit amount will depend on the system type and efficiency rating.
California HVAC Rebates and Incentives
Tax credits aren’t the only way California homeowners can cut costs on their HVAC upgrades. State and local programs offer rebates and incentives to further reduce the out-of-pocket cost when installing a high-efficiency system.
The top California rebate and incentive programs include:
- TECH Clean California: Provides rebates and financing options for installing energy-efficient HVAC systems.
- California Energy Commission programs: Includes incentives and rebates for energy-efficient home improvements.
- Utility company rebates: Providers across California offer up to $3,000 to offset the installation cost of high-efficiency HVAC systems.
Each program has unique eligibility requirements based on homeowner income, location, system type, and energy efficiency rating.
Applying for HVAC Rebates and Tax Credits
Research available programs in your area to apply for HVAC rebates and tax credits. Note the eligibility requirements, required documents, and application deadlines. Next, find a system that meets the energy-efficiency standards of each program. If you’re unsure of which unit to choose, contact a local HVAC company in your area. They’ll be able to explain your options and take care of the installation.
Keep all receipts, certifications, and installation documentation for rebate applications and to claim the credit when filing taxes. Carefully follow the application instructions for rebate and incentive programs, and submit it before the deadline. For tax credits, use IRS Form 5695 to claim the credit when you file income taxes the year following installation.
How Can Fleetwell Air Conditioning, Heating, and Plumbing Help?
Navigating HVAC tax credits and rebates can be overwhelming. At Fleetwell Air Conditioning, Heating, and Plumbing, we’re here to help guide you through the process to maximize your savings. Our experts will help you choose a high-efficiency HVAC system that meets all requirements, perform the installation, provide the required documentation, and guide you through the steps to claim your credits and rebates.
With our expertise by your side, you’ll not only save on installation but also benefit from:
- Improved energy efficiency
- Lower utility bills
- Enhanced indoor air quality
- Reliable home comfort
Call Fleetwell To Learn More Today!
Whether you have questions about how to save on HVAC upgrades or are ready to switch to a high-efficiency system, the team at Fleetwell is here to help. We have years of experience helping California homeowners maximize their energy efficiency with top-quality HVAC upgrades and installations. From selecting the right system to seamlessly installing it in your home, our experts provide quick, reliable service from start to finish.
Book online or call us to speak to one of our experts today! We also offer comprehensive HVAC repairs and maintenance, so you can count on us to keep your new system working in top condition for years to come.
Frequently Asked Questions
How much can I save with HVAC tax credits and rebates?
The amount you’ll save varies depending on the programs you apply for, the type of system you install, your location, and personal income. Homeowners can save anywhere from several hundred to thousands for upgrading their HVAC system. The more efficient system you choose and the more programs you apply for, the greater your potential savings.
Do I need to replace my entire HVAC system to qualify?
While the requirements for each incentive vary, you often don’t need to replace your entire HVAC system to qualify. Upgrading just part of your system, such as the furnace or air conditioner, to a high-efficiency model can make you eligible for rebates and tax credits. If you’re unsure if your upgrade qualifies, contact our team to check with one of our experts.
What documents do I need to file for the tax credit?
To file for the HVAC tax credit, you’ll typically need the manufacturer’s certification statement, proof of purchase, and installation receipts. You’ll likely need to submit these documents when filing your tax return, after which you’ll receive the credit as a deduction on your owing income tax. When you schedule installation with our team, we’ll help you gather all necessary documentation to prepare for filing.
Am I still eligible if I install the unit myself?
Almost all tax credits, rebates, and incentive programs require professional installation of your new HVAC system. Certified technicians have the training and expertise to install the unit properly and make sure it meets all necessary safety and efficiency standards. By opting for professional installation, you’ll also comply with warranty regulations, meaning you won’t have to pay out-of-pocket for potential issues down the road.
