Energy Efficient Home & HVAC Tax Credits

Energy Efficient Home & HVAC Tax Credits - Tulsa Oklahoma

Installing energy-efficient HVAC equipment is a great way to reduce your carbon footprint while saving money and energy. However, this equipment is also often expensive. You can save money, but only if you can afford the system in the first place. Fortunately, there are a number of tax incentives that can help offset those costs. Here's a breakdown of different HVAC tax credits and what they entail.

Federal Energy Tax Credits - 2023

The previous Nonbusiness Energy Property credit (25C) for installing high-efficiency equipment was extended through 2022 and provides federal tax credits of up to $500.
The amended Energy Efficient Home Improvement Credit (25C) begins in 2023 and extends through 2032. It increases the tax credit limits for high-efficiency equipment as follows:

1. Eligible equipment includes:

   • Heat pumps and heat pump water heaters

   • Energy-efficient HVAC systems (including furnaces, boilers, and central AC)

2. The 25C credit has an annual cap of $1,200 (except heat pump):

   • Up to $600 each for a qualified air conditioner or gas furnace, with an annual cap of $1,200

   • Up to $2,000 with a qualified heat pump, heat pump water heater, or boiler

There are no income requirements for this tax credit, and it cannot be combined with other federal programs.

Federal HVAC Tax Credit

The federal government has always made a point of encouraging energy efficiency for homeowners as well as business owners. Switching to high-efficiency HVAC equipment helps reduce pollution and fight global warming.

The most recent HVAC tax credit is called 25C. It covers high-efficiency heating and cooling systems, including A/Cs, furnaces, heat pumps, and mini splits. Originally enacted for equipment purchased in 2018 and 2019, the credit has been extended through 2021.

Therefore, if you're thinking about getting a high-efficiency system, now is the time. Any qualifying system purchased and installed before the end of this year can earn you a credit of 10% of the cost up to $500. There's also a $300 maximum credit available for certain ACs, heat pumps, and mini-splits, or a $150 credit for furnaces and boilers.

Renewable Energy Credits

There are also credits for homeowners who invest in renewable energy, including fuel cells, wind turbines, and geothermal heat pumps. If you installed a qualifying renewable energy system by the end of 2019, you can claim up to 30% of the cost. If you install one by the end of 2022, you can claim up to 26%, or 22% by the end of 2023.

There may also be certain state credits you can claim that are specific to Oklahoma. Whatever tax credits you qualify for, be sure you're taking full advantage of them. Talk to your tax adviser to see how you can benefit from these credits and what you need to do to claim them.

For help making upgrades that you can claim an HVAC tax credit for, contact us at Air Assurance. We help Broken Arrow homes save money and energy.

There’s Still Plenty of Time to Get Tax Credits on Geothermal Heat Pumps

While many of the federal tax incentives for energy-efficient residential HVAC systems expired a couple of years ago, the tax credit for geothermal heat pumps (and home solar systems) remains in effect through 2016. This means homeowners still have a year to write off a big part of their investment for this super-efficient technology, the geothermal heat pump.

How Does a Geothermal System Work?

Geothermal systems start with a network of pipes buried on your property, or submerged in a body of water. The ground system can either be a shallow horizontal loop field or a very deep vertical loop field, depending on what sort of lot your house is built on, among other factors. A liquid solution — usually a mixture of antifreeze and water — serves as the medium of heat exchange.For heating, the solution circulates in the pipes, extracting heat from the ground, which is a moderate 50-60 degrees. The heat energy is transferred from the water solution to a heat pump unit inside the house, and then transferred into indoor air, which is distributed via a blower fan and ducts, just as with any heat pump system. Cooling with a geothermal heat pump works the same way, except that heat energy extracted from the house is transferred to the water-antifreeze solution, and then "rejected" into the ground.

Why is this So Efficient?

The energy used in a standard air-source heat pump is mainly used to extract heat energy from cold air for heating, or to release heat energy into very warm air for cooling. When the heat is being released from, or deposited into, ground or water that's neither hot nor cold, much less energy is required. This is what happens with a geothermal heat pump.

How Do the Tax Credits Work?

The energy-efficiency federal tax credit equals 30 percent of the cost of purchasing and installing an Energy Star-qualified geothermal heat pump in your home or second residence (not rentals).

For more information on installing an energy-saving geothermal heating and cooling system in your Broken Arrow area home, please contact us at Air Assurance.

Our goal is to help educate our customers in the Tulsa and Broken Arrow, Oklahoma area about energy and home comfort issues (specific to HVAC systems). Credit/Copyright Attribution: “karen roach/Shutterstock”

The Geothermal Heat Pump: Still Eligible For That Hefty Tax Credit

Geothermal heat pumps are highly efficient heating and cooling systems that operate cleanly, quietly and economically. If you are considering installing a geothermal heat pump in your Tulsa-area home, remember there are still substantial energy tax credits available from the federal government that will help offset the cost of the system.By investing in geothermal heating and cooling, you are installing a home-comfort system that is astonishingly efficient, returning three or four units of heat for each unit of electricity the system consumes. This sounds like a physical impossibility, but it works because geothermal heat pumps move existing heat rather than burn fuel to generate it.Geothermal systems can slash energy costs by up to 70 percent. System prices vary based on factors such as the type of system and the features of the home where it is installed, but it is not uncommon for geothermal heat pump systems to cost between $10,000 and $20,000.In an effort to make geothermal heating and cooling more accessible, and at the same time promote energy conservation, the U.S. government offers a substantial income tax credit to homeowners who make the switch to geothermal. These credits can be applied directly to a homeowner's income taxes for the year in which the geothermal equipment was purchased and brought into service.Major points to keep in mind about the tax credits include:

• Credits amount to 30 percent of the system's cost, with no upper limit.

• System must be placed into service by Dec. 31, 2016.

• Credits apply to both the cost of the heat pump and the installation.

• Credits apply only to equipment for a primary residence or secondary home; rental units do not qualify.

• Credits are valid for geothermal systems purchased for either new or existing homes.

Federal tax credits expire in 2016. Check the Database of State Incentives for Renewables & Efficiency for information on other incentives programs for Oklahoma.For more than 30 years, Air Assurance been a leading HVAC sales, installation and service provider to customers in and around Tulsa. Contact us today for more information on geothermal heat pump systems and how one can benefit you.Our goal is to help educate our customers in the Tulsa and Broken Arrow, Oklahoma area about energy and home comfort issues (specific to HVAC systems). Image courtesy of Shutterstock

Adding Insulation Is A Simple Home Improvement Task That May Warrant A Tax Credit

This is the time of year when adding insulation is important for keeping the cold Oklahoma winter air out, and the warmed, humidified air inside. In addition to the benefits of added comfort and lower utility bills that you can expect from your investment, there is also a limited-time insulation tax credit that you can take advantage of. This tax credit is due to expire on December 31, 2011, so now is the time to act.Adding insulation to your attic is among the most cost-effective home improvement projects you can choose to perform. The insulation tax credit allotment is 10 percent of the cost of materials or up to $500. The standard types of insulation you might want to use are included in the tax credit. Examples include batts, rolls, rigid board, blow-in fibers, pour-in-place and expanding spray insulation.In addition to adding insulation to your attic and various other locations in your home, you can also make air-sealing improvements around your home that increase your energy efficiency and earn you even more tax credits. Materials such as weatherstripping, house wrap, caulk and spray foam can be used to seal up the leaks in your home. These products can go toward a greater insulation tax credit if they come with a Manufacturer’s Certification Statement.As for applying for the insulation tax credit, the process is simple. You must fill out IRS Form 5695 and submit it with your regular tax forms by April 15, 2012. The 2011 version of this form, which is the one you need to apply for 2011 insulation tax credit, is not yet available, though it will be in early 2012. Be sure to include this tax credit information on your 2011 IRS 1040 tax form as well.To get started down the road to improved home insulation, lower utility bills and a worthwhile tax credit, please contact Air Assurancein Broken Arrow today.Our goal is to help educate our customers about energy and home comfort issues (specific to HVAC systems). Air Assurance services Tulsa, Broken Arrow and the surrounding areas. Visit our website to see our current promotions and get started today!