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Upgrade Your Home with Federal Tax Credits and Rebates

November 2, 2022

Summary

We all like the idea of saving money. New federal tax credits are making it possible to save money on your tax return while you make your home more energy efficient. Rebates are also available to offset a portion of the cost of new equipment. That's a win for you, and a win for our climate, too.

The nonbusiness energy property credit offers a federal tax credit for energy-efficient home improvements - improvements that will save you money and make your home a more comfortable place to live in. In this article, we'll dive into the details of how you can take advantage of them.

Contents

An opportunity to save money

The recently-passed Inflation Reduction Act includes some sweet incentives for homeowners to make improvements to their primary residence, in the form of tax credits and rebates - credits and rebates that will go directly into your pocket.

The bill includes $370 billion dollars for energy climate programs, allocated for homeowners who replace inefficient furnaces, boilers, water heaters, and more, with electricity-powered high-efficiency options.

So if you've considered upgrading to a new, efficient heat pump, electric HVAC system, or electric water heater, there are some significant incentives for you to do so.

And that isn't all. Tax credits and rebates are available for various other energy-saving options, including rooftop solar, energy-efficient windows and roofs, home insulation, and much more.

Let's look at how you can save money with these incentives.

Let's learn the details

The exact details of how much you can earn in credits or rebates depend upon the category of equipment you're purchasing. Let's begin our overview with a core part of the program, the High-Efficiency Electric Home Rebate (HEEHR) program. 

HEEHR rebates

The $4.275 billion dollar High-Efficiency Electric Home Rebate (HEEHR) program targets funds to be used as rebates for the purchase and installation of high-efficiency HVAC systems, electric panel upgrades, wiring upgrades, electric heat pump water heaters, clothes dryers, and more.

State energy offices will determine the exact amounts of rebates, based on your total annual income, with rebates available to households with a total annual income of less than 150% of the local median income.

The maximum rebate values depend on the equipment, and remember, you're not guaranteed the maximum rebate values.

$8000 for electric heat pump HVAC systems. These are excellent investments if you're looking to save on energy costs. Electric heat pumps are a much more energy-efficient heating system than gas or oil furnaces and use the heat pump for air conditioning as well.

$4000 for electric panel upgrades and $2600 for electric wiring. This may seem like an odd category for rebates, but the goal of the program is to help electrify homes, and the addition of electric heat pumps, electric stoves, and other equipment can often require major electric panel and wiring upgrades, particularly in older homes.

$1750 for electric heat pump water heaters. These new water heaters use heat pumps to warm your water and are much more efficient than conventional gas or electric water heaters.

$840 for electric heat pump clothes driers. As with heat pump water heaters, they use heat pumps to create heat for drying clothes and are much more efficient than conventional clothes dryers.

$840 for electric stoves.

$1600 for home insulation.

Federal tax credits

Federal tax credits are a dollar-for-dollar reduction in the amount of tax you owe. For example, a $500 tax credit will take $500 off of your tax bill when you claim the credit.

There are several categories of tax credits, based on different equipment purchases. Let's examine the types of equipment or improvements that qualify.

Air source heat pumps

Through 2022, ENERGY STAR-certified air source heat pumps installed in your primary residence qualify for $300 federal HVAC tax credits.

Central air conditioning systems

A central air conditioning system rated ENERGY STAR "Most Efficient" and installed in your primary residence qualifies for a $300 tax credit through 2022.

Hot water boilers

It's easy to confuse "water heater" with "water boiler." But a hot water boiler is used as part of a steam heating system that distributes steam throughout the home to radiators heating individual rooms.

This federal tax credit is applicable for gas, propane, or oil water boilers. Water boilers rated ENERGY STAR "Most Efficient" qualify for a $150 tax credit when installed in your primary residence.

Water heaters

Water heaters - used to provide hot water for domestic use - laundry, dishwashers, showering, and so on, qualify for tax credits. Through 2022, most electric or gas water heaters that are ENERGY STAR certified qualify for a $300 tax credit.

Furnaces

Through 2022, qualified natural gas, propane, or oil furnaces that are ENERGY STAR certified qualify for a $150 tax credit. This credit does not apply in states in the US south.

Advanced main air circulating fan

Advanced main air circulating fans circulate the air your furnace heats throughout your home's ducts. Through 2022, advanced main air circulating fans that consume less than 2% of the furnace's project energy consumption qualify for a $50 tax credit.

Be sure to check

The tax credit figures given are based on legislation as set by the Consolidated Appropriations Act. Tax credit amounts for future years may change and will be updated in 2023.

This information from the energystar.gov website will help you check whether your new equipment qualifies. Ask your contractor if there is any question about whether the equipment qualifies, and get a copy of the Manufacturer's Certification Statement to be sure.

Another opportunity

The recent Inflation Reduction Act also provides some attractive incentives for other green initiatives.

Electric vehicles

Beginning in 2023, the act provides a tax credit of up to $4,000 for the purchase of a used EV and up to $7,500 for a new EV. When you consider that the average household spends a substantial amount on gasoline, that's an attractive incentive. And you can use some of the tax credit money to install a high-speed charger!

Count on Team Enoch for your improvements

These are great times to upgrade your home's electrical equipment and HVAC system. When you're ready to see what you can do for your home, you need a partner you can trust to work with you. If you're in the Dallas/Fort Worth area, that partner is Team Enoch.

Team Enoch is committed to providing high-quality products and workmanship to our customers, at a fair price. With over 2500 positive reviews, and over 10,000 jobs completed every year, we pride ourselves on ensuring that our well-trained technicians do the job right the first time.

At Team Enoch we have extensive experience in installing a wide range of HVAC heating and cooling equipment and performing comprehensive electrical work on your home. And we also have plenty of experience in installing new roofs, windows, and more.

If you're in the Dallas Fort Worth area and are ready to improve your home's energy efficiency (and earn tax credits) Team Enoch has the expertise to help your out. Contact us for all your home needs. Remember, estimates are always free!

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