If you’re considering purchasing and installing a heat pump, you may be eligible for a tax credit. In this article, we’ll explain how the tax credit works and provide some key information to help you understand it.
Which heat pumps are eligible?
Heat pumps are popular for homeowners looking to heat and cool their homes efficiently. They are often referred to as “ductless heat pump systems” or “mini-splits” depending on who you’re talking to. The tax credit applies to air-source heat pumps, the most common type of heat pump used in homes. Geothermal heat pumps, while also eligible, are much less common and tend to be more expensive to install.
How the heat pump tax credit works.
The tax credit exists thanks to the Inflation Reduction Act passed in 2019. The act provides tax credits for a variety of energy-efficient home improvements, including air-source heat pumps. The credit is available for heat pumps that are installed in your primary residence between January 1, 2021 and December 31, 2023.
To be eligible for the tax credit, the heat pump must be certified by ENERGY STAR, which is a government-backed program that helps businesses and individuals save money and protect the environment by promoting energy-efficient products. You can find a list of ENERGY STAR-certified air source heat pumps on their website.
The tax credit amount is 26% of the cost of the heat pump, including installation. There is no cap on the amount of the credit, but keep in mind that it’s a non-refundable credit, which means that you can’t receive more than you owe in taxes. However, you can carry any unused portion of the credit forward to the next tax year.
It’s important to note that the tax credit is set to expire at the end of 2023, so if you’re considering purchasing and installing a heat pump, you should take advantage of this opportunity soon.
Why you should install a heat pump.
Purchasing and installing an ENERGY STAR-certified air source heat pump can save you money on your energy bills. According to ENERGY STAR, an efficient air source heat pump can save homeowners up to 30% on their heating and cooling costs compared to a conventional system. You can also reduce your carbon footprint, and contribute to a more sustainable future.
If your home does not currently have existing ductwork, a heat pump may be a good investment. Especially if you’re not looking to run ductwork throughout your home to deliver the heating and air conditioning. Heat pumps make a wise choice even if you’re planning on a renovation by adding an extension to your home.
Consult your tax preparer/accountant about this tax credit.
By now, there’s sufficient information circulating about this tax credit and how you can benefit from it if you’re eligible, and so on. We can help you with the right size to ensure it will cover the area in your home or business and install and service the unit with our maintenance programs.
Flotechs Plumbing and Heating can help you weigh the pros and cons of buying a heat pump. We are known in Yonkers as reputable plumbers, but we also serve Westchester County’s plumbing, heating and cooling needs. We sell, install and maintain HVAC equipment on residential, commercial, and building management company accounts. Call us to discuss the benefits of this energy-efficient home improvement and see if installing one is right for you.