A great reason to upgrade your HVAC equipment is that modern systems are much more efficient. You’ll save money through lower operating costs. One way to save money is by utilizing incentives for green technologies. Let’s explore what you need to know about them.
Tax Credits
Tax credits are a common way the government incentivizes energy-efficient HVAC upgrades. The money it allocates alleviates consumer burden while lowering energy consumption. Most HVAC tax credits are federal, but there are some state tax credits, too. An important distinction among tax credits is whether they’re refundable or non-refundable.
Nonrefundable Tax Credits
Federal HVAC credits in the U.S. have traditionally been non-refundable. This means that you can’t earn money on the credit. Consider a homeowner eligible for a $1,000 tax credit who only owes $500 in taxes. That person would pay $0 in taxes, and the rest of the credit would go unused. Sometimes, you can push the unused portion to the following year.
Refundable Tax Credits
You can earn money on refundable credits. The IRS will refund you any amount above what you owe in taxes as a kind of rebate. If a homeowner owes no taxes and is eligible for a $250 credit, that person will receive a check or direct deposit for $250.
Rebates
A rebate is a cash provided to a consumer for making a purchase and perhaps meeting other criteria. There are two core types of rebates: standard and point of sale.
Standard Rebates
A standard rebate is a refund after the purchase. A consumer must typically file a rebate claim, including the receipt and other relevant documentation. The rebate provider will then process the claim and send the rebate, which can take weeks.
Point-of-Sale Rebates
POS rebates are less common but more convenient for the consumer. They’re discounts you get at the time of purchase, so you never have to allocate that amount out of pocket.
Rebate Providers
HVAC rebates can come from many different sources. Notably, you can often combine rebates from various sources to save even more.
Government Agencies
Rebates are an alternative to tax credits through which the U.S. incentivizes consumers. One advantage to rebates is that they can reach a broader population than through tax credits. Government rebates and tax credits are usually not combinable. You can choose one or the other and opt for whichever is more lucrative.
Utility Companies
Behind government agencies, local utility companies are the leading providers of rebates in the U.S. Some funding may come from federal, state, and local governments. Still, these providers often fund the rebates themselves to help achieve reduced demand on the grid.
Nonprofit Organizations
Nonprofit organizations inherently exist for the greater good of the public. Many focused on climate change and other important matters use donations to offer rebates to citizens.
Manufacturers
Rebates from manufacturers, distributors, retailers, and other entities can also be found in the supply chain. In some cases, this is another way public funding reaches consumers. In others, it’s an incentive to help a company reach sales and other goals.
ENERGY STAR Certification
The Department of Energy sets energy efficiency standards as legal requirements, and the Environmental Protection Agency sets higher standards. They’re not a legal requirement, but products that achieve them get the ENERGY STAR label. This label makes it easier for consumers to make energy-efficient choices with confidence. It’s also a requirement for many energy incentives. That includes all tax credits and rebates available through federal and state governments.
Finding Energy Incentives
So many energy incentives are available that it can be challenging to sort through them all. Explore these top four energy incentive sources to ensure you don’t miss any.
Local HVAC Companies
Your local, trusted HVAC provider should be your first source. It will often be the best source of information about manufacturer rebates and rebates from other groups in the supply chain.
Local Utility Providers
Check with your local electric company and, if applicable, fuel providers. Utility companies are the best source of rebates provided directly through them. They often provide information about upcoming offers not yet available through the EPA system.
ENERGY STAR Website
Incentives made available through the EPA system are available via the ENERGY STAR website. This database is powerful, and you can limit the search results appropriate to your zip code. Users can also pair the results down further based on their interests. If buying heating equipment, for instance, you won’t have to look through results for water heaters and appliances.
Database of State Incentives for Renewables & Efficiency
The DSIRE is an online database and another excellent resource. It may be the most exhaustive collection of HVAC and other energy rebates and credits online. You can click on your state to find all the applicable policies, programs, and offers. Advanced filters are also available to help you zero in on the items that interest you.
Some Notable Energy Incentives
The federal government offers three core programs to Americans, including tax credits and rebates.
Energy Efficient Home Improvement Credit
The Energy Efficient Home Improvement Credit is a non-refundable tax credit that’s changed names over the years but existed since the 1990s. It allows consumers to claim 30% of their energy-efficient HVAC equipment and installation costs. The total amount you can claim for any particular item is specific to that type of equipment. You can claim up to $3,200. If you install a furnace and an AC, you can claim the credit for each.
High-Efficiency Electric Home Rebate
The HEEHRA is a federal rebate program that the government distributes to homeowners at the state level. This rebate is notable because it’s a POS rebate, and most states will begin awarding it in 2025. The maximum total rebate for a household is $14,000. Depending on your income level, you can get $4,000 or $8,000 just for a heat pump. Check with your state to determine eligibility and claim requirements.
Homes Rebate Program
The Homes rebate is a federal rebate for heat pump systems. You must file a tax return and include the proper form to claim the rebate. You don’t need to owe taxes. The IRS will include the rebate amount with any other refund you were due, if applicable.
Learn More About Energy Incentives in Madison
Southport Home Services has locations in Caledonia, Madison, and Wausau, WI, and has served this region since 2005. Our company provides both residential and commercial services. We offer club membership that can save money while keeping your HVAC and plumbing in tip-top shape. Our technicians and plumbers are available 24/7 for emergencies. We install air conditioners, maintain, and repair boilers, furnaces, heat pumps, air conditioners, and ductless mini-splits.
You can count on us for MERV and HEPA filters, duct cleaning, air purifiers, UV lamps, humidifiers, and dehumidifiers. Our plumbers specialize in water, gas, and sewer piping. We perform kitchen and bathroom remodels and specialize in water heaters, water treatment, and sump pumps. Contact us today to schedule a service appointment or an on-site consultation.
