is a new hvac system tax deductible

Is a New HVAC System Tax Deductible?

Your home is your greatest investment, and your heating and cooling units are as important to your house’s functioning ability as optimal plumbing and electricity. Therefore, it’s understandable that you would wonder, “Is a new HVAC system tax deductible?” especially since its efficiency is a necessity in Brick, NJ’s 86-degree summer highs and 21-degree winter lows. 

At Eastern Shore HVAC, our family-owned and operated team will help you determine whether HVAC installation services or repairs are worth a tax credit or rebate. We’ll also decipher how much you should expect to receive, depending on what system work you plan to have done. 

Why Are HVAC Systems Deductible?

In August 2022, the Inflation Reduction Act emerged when the cost of living transcended. Among reducing prescription drug prices, the program focuses on climate protection funding that provides a deductible for every homeowner who takes a more environmentally friendly route with their structure’s units and insulation. 

Fortunately, that includes purchasing and repairing HVAC units since older, less energy-efficient ones burn more electricity, taking a toll on the local energy grid. The federal energy tax credit program works in two forms, including residential tax credits and non-business federal tax credits, replacing the 2022 Non-Business Energy Property Tax Credits. 

Tax Credit Programs

The residential tax credit lowers taxes if your home uses a geothermal device like a heat pump that absorbs heat from the earth in the winter and releases it into the ground in the summer. Since it moves heat rather than creates it like furnaces or air conditioners, it burns little energy. Solar, wind, and fuel-cell systems also fall under this residential tax credit, allowing you to file it on your tax returns. 

The non-business federal tax credits cover a wide range of equipment, including wall insulation and roof and window repairs. As long as the DOE recognizes the materials used for the projects or the jobs themselves as energy-efficient improvements, the department reimburses as much as 30% of the installation costs in tax credits. However, your devices also need a high SEER rating to qualify for credits. 

What HVAC Work Is Deductible?

To save money while improving your unit, you may upgrade your current system for more efficiency. However, “Is a new HVAC system tax deductible?” isn’t the only question to ask since you can also conduct home improvement projects like installing skylights for natural lighting or putting in better doors and windows. Doing so lets less controlled air out, which otherwise forces your unit to work harder. 

For windows and skylights, you may receive 10% of the product cost in credit, adding up to no more than $200 back, and for pricier doors, you may receive as much as $500. Wall, ceiling, attic, and crawlspace insulation, like rolls, blown-in, or sprayed fiberglass insulation, may also earn you $500 in credit. 

If you’re installing new appliances, you may get:

  • $300 in credit for air source heat pumps, non-solar water heaters, biomass stoves, and central air
  • $150 for oil, gas, or propane hot water boilers, fans, or furnaces
  • $50 for advanced fans for air circulation 

Rebate Programs for HVAC

While tax credit lowers how much you owe in taxes for a given year, rebate programs provide a refund if you paid too much. You may receive a rebate if you install an energy-efficient furnace or air conditioner that controls heat or cool air generation, respectively, like one with a variable-speed motor blower. 

Not only is a new HVAC system tax deductible, but smaller components within your system, like smart thermostats, are also eligible for rebates. These thermostats allow you to control the temperature across your entire home from your smartphone, laptop, or tablet. If you forgot to turn down the thermostat, you can do it on the go, saving you on utilities and reducing the strain on your local grid. 

Certain utility company programs also ask you to give them control of your thermostat during extreme weather so they can adjust it a few degrees as necessary. 

What Can You Do with Over 40 Years of Eastern Shore Experience?

Taking care of your home and the environment shouldn’t dry out your wallet. Our licensed and certified team with 42 years of experience carries top manufacturing brands like Lennox, York, and Trane that create their products with efficiency in mind. 

When you need energy efficiency tax credits for your cooling and heating services, contact Eastern Shore HVAC. We’ll determine “Is a new HVAC system tax deductible?” and provide the best options when you fill out our form online or call (732) 800-9416 for a free estimate in Brick, NJ, today!