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Federal Tax Credits for Heat Pumps and Air Conditioners 2023

Save Up To $2,000

On January 1, 2023, the Inflation Reduction Act went into effect, offering new federal tax credits for a variety of home energy efficiency improvements. These include installing high-efficiency air conditioners and heat pumps, upgrading water heaters, and making other upgrades to the home. The tax credits provide financial incentives for homeowners to reduce their energy bills and be more energy efficient.

The tax credits are designed to help reduce the cost of making energy-saving improvements and encourage homeowners to invest in renewable energy sources. By taking advantage of these incentives, homeowners can make their homes more comfortable, save money on their energy bills, and help protect the environment. With the new Inflation Reduction Act, now is the time to start making energy-efficient improvements in your home.

What Products are Eligible?

As specified by energystar.gov https://www.energystar.gov/about/federal_tax_credits/air_source_heat_pumps

For heat pumps, ENERGY STAR offers a general certification and a cold climate certification.

In general, all ducted heat pumps that have earned the ENERGY STAR label are eligible, as well as certified mini-split systems (non-ducted) with:

  • SEER2 > 16
  • EER2 > 12
  • HSPF2 > 9

Among the models that earn the ENERGY STAR Cold Climate designation, eligible systems are:

  • ducted with EER2 > 10
  • mini-splits with
    • SEER2 16
    • EER2 9
    • HSPF2 > 9.5

Note: Under the tax code, eligible equipment must “meet or exceed the highest efficiency tier (not including any advanced tier) established by the Consortium for Energy Efficiency which is in effect as of the beginning of the calendar year.”  The eligibility described above is consistent with this requirement.

Annual Limits on Energy Efficient Home Improvement Tax Credits

The overall limit for energy-efficient home improvement tax credits in a single year is $3,200. This can be broken down into two separate limits: a maximum of $1,200 for any combination of windows/doors/skylights, insulation, and electrical upgrades; and a maximum of $2,000 for heat pumps, heat pump water heaters, and plus furnaces, boilers and central air conditioner. Note that ENERGY STAR certified geothermal heat pumps are eligible for a separate tax credit and not to be included in these limits.

Find out more here: https://www.energystar.gov/about/federal_tax_credits/air_source_heat_pumps

If you are in the market for a new furnace, SureTech Heating & Cooling is a trusted source for furnace installation in Vancouver Washington. We will help you choose the right size and features for your needs.


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