What Are the New Federal Tax Credits for 2024 on HVAC Systems?

If you’re a homeowner, you’ve probably heard about the Inflation Reduction Act of 2022 and may be curious about what federal tax credits are available to help you afford the cost of your next HVAC installation.

Depending on the type of equipment you have installed, you may be eligible to recover thousands in installation costs for your new system.

Here are all the details surrounding the 2024 tax credits for homeowners interested in upgrading their HVAC equipment.

What Is the Inflation Reduction Act?

The Inflation Reduction Act of 2022 offers federal income tax credits for home improvements that increase energy efficiency until 2032. From Jan. 1, 2023, to Dec. 31, 2032, homeowners can benefit from a range of tax credits based on the type of equipment they install or replace.

These credits are available to owners of primary residences who are updating their existing homes. They do not apply to new construction or rental properties.

It’s important to note that there’s a maximum limit of $3,200 for an energy efficiency tax credit in a given year. This limit can be split into two categories.

First, there’s a $1,200 limit for various home envelope enhancements, such as windows, doors, skylights, insulation, electrical improvements, furnaces, boilers, and central air conditioners. Second, a combined limit of $2,000 applies annually to heat pumps, heat pump water heaters, and biomass stoves/boilers.

Available Heating & Cooling Tax Credits for 2024

As mentioned above, the available tax credit you may claim depends on the type of HVAC system you have installed or replaced. Below are the guidelines for each type of heating or cooling system updated as of December 2022:

Air Source Heat Pumps

Homeowners who install an air source heat pump can receive a tax credit of 30% of the installation cost, with a maximum limit of $2,000, for eligible products.

Both ducted and ductless mini-split heat pumps qualify for the tax incentive program; however, eligibility requirements for specific products are determined based on the region.

For homeowners in the Rock Hill and Charlotte areas, these stipulations apply:

• Ducted units: Any heat pumps labeled with the ENERGY STAR® designation are eligible for the tax incentive program.
• Ductless mini-splits: Only ENERGY STAR-certified heat pumps meeting these ratings are eligible:

• SEER2 ≥ 16

• EER2 ≥ 12

• HSPF2 ≥ 9

Central Air Conditioners

When you install a new central AC system, you can receive tax credits equal to 30% of the installation cost, with a maximum limit of $600. Split systems that have a SEER2 greater than 16 can qualify for ENERGY STAR certification.

All packaged systems that have earned the ENERGY STAR certification are also eligible for the tax credits.

Hot Water Boilers

Homeowners can claim tax credits worth 30% of the cost (up to $600) for eligible hot water boiler installations. The product eligibility requirements for different types of boilers are:

• Gas boilers: To qualify for the tax incentive program, gas boilers must be ENERGY STAR certified and have an AFUE rating of at least 95%.
• Oil boilers: Under the program, only ENERGY STAR-certified oil boilers that use specific fuel types are eligible. The manufacturer’s rating for the equipment must confirm its compatibility with fuel blends containing a minimum of 20% biodiesel, renewable diesel, or second-generation biofuel by volume.

Furnaces

Homeowners can claim tax credits of up to 30% (or $600) of the installation cost for qualifying furnace systems. The product eligibility requirements differ based on the type of furnace installed:

• Gas furnaces: To be eligible, gas furnaces must be ENERGY STAR certified and have a minimum AFUE rating of 97%.
• Oil furnaces: Eligible oil furnaces must be ENERGY STAR certified and designed to run on specific fuels. These furnaces need to be compatible with fuel blends containing a minimum of 20% biodiesel, renewable diesel, or second-generation biofuel by volume.

Take Advantage of Available Federal Tax Credits With Honesty Services

By using the existing tax incentive programs, you can effectively reduce costs on your home improvements while enhancing energy efficiency in your home. At Honesty Services, we’re dedicated to helping you achieve this goal.

We’ll guide you through the available tax credits, maximizing your savings and strengthening the efficiency of your home. Our team provides free estimates on replacement quotes and a steadfast commitment to your utmost satisfaction.

For all your HVAC installation and replacement needs in Rock Hill, SC, and Charlotte, NC, turn to the team at Honesty Services.

Contact our team at 803-740-1241 today to learn more about the available tax credits under the Inflation Reduction Act.