Thinking about updating your HVAC system? Well now is the time! A section of the new Inflation Reduction Act gives incentives for homeowners to make energy-efficient changes to their homes. While there are credits for qualifying gas furnaces and air conditioning systems, the most significant credits and rebates included are for heat pumps. Keep reading to learn how to save up to $2000 for qualified heating and cooling systems.
How Does The Heating & Air Conditioning Tax Credit Work?
Although these eco-friendly options are more expensive to install, new tax credits included in the Inflation Reduction Act for energy-efficient homes can make the cost much more palatable. The new tax credit available through the Inflation Reduction Act will help offset the cost of heat pump installation, which is more expensive than a traditional HVAC. The credit covers up to 30% of what you paid for the heat pump, including installation costs, up to $2000 through the end of 2032. The credit for furnaces and air conditioners covers up to 30% of what you paid for the equipment, including installation costs, up to $600 for each product. Any taxpayer can qualify for the tax credit as long as they have installed the heat pump, furnace, or air conditioner on or after January 1, 2023. A smaller tax credit of up to $300 can be claimed on qualifying systems installed in 2022. You can also claim up to $2000 in tax credits on expenditures related to the installation of heat pumps. A few of these credits include up to $600 for air-sealing systems, $150 for a home energy audit, and $600 for any electrical supply upgrades needed to complete your energy-efficient project.
In addition to the tax credits under the Inflation Reduction Act, homeowners can also claim credits under the extended Residential Clean Energy credit. This provides an income tax credit of up to 30% for any clean energy home equipment like solar panels, battery storage, wind energy, or geothermal heating through 2032. This credit does decrease to a credit of up to 22% for the years 2031 and 2032.
Inflation Reduction Act in South Carolina
Some states also have guidelines, credits, and rebates for these kinds of upgrades. While the protocol for combining state and federal credits has yet to be completely fleshed out, theoretically as long as your state program does not rely on federal funding you should be able to stack them. Although the South Carolina state tax credit incentive for geothermal systems expired in 2021, South Carolinians still qualify for the federal credit.
If you are interested in installing a heat pump, furnace, or air conditioner or have questions about what installation would mean, call us or visit us online today! We are happy to supply Charleston with the best heating and air conditioning systems and our team of experts is always ready to answer your questions and address any concerns you may have. Call us for all of your Charleston heating and cooling needs!
Disclaimer: AGL Heating & Air cannot be held responsible or guarantee your tax credit eligibility. For specific tax information, please consult your tax advisor or financial professional.