Upgrading to a new HVAC system comes with several advantages, such as improved efficiency and lowered utility bills. Aside from rebates, promotions, and financing options, you can also take advantage of federal, eco-friendly HVAC rebates in 2021. High-efficiency HVAC systems will maximize your savings while increasing comfort levels for you and your family.
So, you have just bought a new HVAC system and have heard that you could be eligible for a federal tax credit but do not know how to go about it? Are you wondering what does this tax rebate cover? Read on to know more.
For all homeowners who have recently bought an HVAC system or plan to buy one, here’s some great news for you. The government has extended the Non-business Energy Property Tax Credits on residential HVAC equipment. This means that the HVAC unit you recently bought or intended to buy and install through December 31, 2021, is eligible for a $300 tax credit.
What Is the Federal Tax Credit for HVAC Systems?
The Non-business Energy Property Tax Credit gives homeowners an incentive to invest in home improvements that are energy efficient such as water heating equipment, high-efficiency heating, and cooling units. This is a non-refundable personal tax credit that was enacted as a part of the Energy Act Policy in 2005.
How Does Energy Tax Credit Work?
Though this may sound complicated, the incentive is rather simple. As per the tax credit, homeowners will be eligible to receive a credit against their personal taxes for an amount equal to 10% of the amount paid or incurred up to $500. In some cases, a specific amount can vary between $50-300.
The HVAC unit that you buy and install must have certain specifications for you to be eligible to receive this tax rebate. To understand the specifications better, we will give you a run-down of certain HVAC system abbreviations.
SEER – SEER stands for Seasonal Energy Efficiency Ratio, which in simple terms is the measure of how much heat can be removed by a heat pump or air conditioner in watts per hour. The higher this ratio is, the more energy-efficient the unit will be.
EER – EER stands for Energy Efficiency Ratio and measures how efficiently a heating and cooling unit can operate when the temperature outdoors is 95 degrees Fahrenheit.
HSPF – HSPF stands for Heating Seasonal Performance Factor. This is a ratio of the heat output from a heat pump over its electricity to generate the heat.
AFUE – AFUE stands for Annualized Fuel Utilization Efficiency and is the percentage that is used to rate a furnace’s heating efficiencies. Like SEER, the higher the AFUE, the more energy-efficient the unit will be.
To qualify for a tax rebate, the heat pump you install must have a minimum rating of 15 SEER, 8.5 HSPF, and 12.5 EER. If you are installing a central air conditioning unit, the unit must have a minimum of 16 SEER and 13 EER to be eligible for the rebate. Packaged systems must score above 14 SEER and 12 EER. In addition, the condenser, evaporator, and compressor in a packaged system must be combined together in a single metal encased unit to receive the tax rebate.
If the HVAC system you install meets the qualifications mentioned above and is energy-star efficient, you can file for the tax rebate. This can be verified via a manufacturer certification or AHRI certification. The best way to find out the specifications of your HVAC unit is to contact the HVAC contractor who installed the system.
The Federal Tax Credit for high-efficiency HVAC units is a great way to save some money. If you are looking to install a new HVAC unit, and do not where to begin, contact Central Heating and Air Conditioning – the best air conditioning installation company in Duluth. We offer a broad range of HVAC system services that include new types of installations. Call us today at (404) 261-2280.