Recent legislation changes mean your HVAC home improvements may offer you more than energy savings. The Inflation Reduction Act (IRA), signed in August 2022, dedicates nearly $370 billion to climate and energy programs, including tax credits and rebate programs intended to offer incentives for energy-efficient purchases.
The IRA includes an extension of the Non-Business Energy Property Tax Credit (Internal Revenue Code Section 25C), which provides a tax credit to homeowners when installing certain residential heating and cooling equipment. This credit has been significantly enhanced and renamed as the Energy-Efficient Home Improvement Tax Credit beginning January 1, 2023.

• Through 12/31/2022 – Homeowners who install equipment before December 31st, 2022 that meets energy efficiency requirements may be eligible for tax credits from $50 to $300, or in some cases, 10 percent of the installed costs (up to a $500 maximum).
• Starting 01/01/2023 through 12/31/2032 –The Energy Efficient Home Improvement Tax Credit provides homeowners up to 30% of installation costs for qualified expenditures, with an annual maximum of $1,200. Qualified air conditioners and furnaces can receive up to $600 each. Qualified heat pumps have a separate aggregate yearly limit allowing the taxpayer to claim up to $2,000. Thus, the maximum total yearly 25C credit amount may be up to $3,200.

Please note: Specific information regarding the qualified systems and how to claim Home Improvement Tax Credits for 2023 and beyond is forthcoming pending the release of application instruction from the IRS.