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How to Save Money with Federal Tax Credits on HVAC System Upgrades

how to save money with federal tax credits

If you’re a homeowner in Philadelphia looking to upgrade your HVAC system, federal tax credits can provide significant savings. In addition to enhancing energy efficiency, these incentives help offset HVAC replacement and installation costs. Here’s an overview of how these credits work, the eligibility criteria, and ways to maximize your savings.

Overview of federal HVAC tax credits

Under the Inflation Reduction Act (IRA) of 2022, homeowners can claim tax credits for installing energy-efficient HVAC equipment. The program, called the Energy Efficient Home Improvement Credit (25C), offers:

  • Up to $2,000 annually for heat pumps, heat pump water heaters, and biomass stoves.
  • $600 per year for central air conditioners, furnaces, and boilers.
  • Credits for air-sealing materials and duct sealing, which improve overall system efficiency.

Eligible homeowners can claim these credits until 2032, allowing for long-term planning of HVAC system replacements.

How federal tax credits reduce HVAC installation costs

Upgrading an HVAC system—whether a mini split AC installation or furnace replacement—can be costly. With federal tax credits, the impact on your budget is less severe:

  • HVAC Replacement Cost Savings: If a new high-efficiency system costs $10,000, a $2,000 credit brings the out-of-pocket expense down to $8,000.
  • Reduced HVAC Installation Cost: You can apply these credits toward the cost of labor, ductwork adjustments, and thermostat upgrades.

Example:

A mini split AC installation in a Philadelphia home may cost between $4,000 to $8,000. With a $600 tax credit, homeowners could reduce the upfront expense by nearly 10%.

Eligible HVAC systems for federal tax credits

To qualify for federal tax credits, your HVAC upgrades must meet specific energy efficiency standards, such as the Seasonal Energy Efficiency Ratio (SEER). Here are some systems eligible for credits:

  • Heat Pumps (up to $2,000): Great for Philadelphia’s mixed climate, offering both heating and cooling.
  • Mini Split AC Systems (up to $600): Ideal for homes without existing ductwork.
  • High-Efficiency Furnaces (up to $600): Reduces winter heating costs.
  • Central Air Conditioning Systems (up to $600): Helps manage Philadelphia’s hot summers.

When planning your HVAC upgrade, ensure that your contractor provides the required manufacturer certification statement, confirming the equipment’s eligibility for federal credits.

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How to claim the HVAC tax credit

Claiming the federal tax credit is simple but requires documentation. Follow these steps:

  1. Obtain receipts and certification: Keep receipts from the installation and a manufacturer’s statement of eligibility.
  2. File IRS Form 5695: This form documents your residential energy-efficient property credit.
  3. Apply the credit to your tax return: The credit directly reduces your tax liability for the year you installed the system.

Additional incentives for Philadelphia homeowners

Apart from federal tax credits, homeowners in Philadelphia can benefit from local rebates and utility incentives:

  • PECO rebates: PECO offers rebates for energy-efficient HVAC equipment installations, potentially saving $300 to $500 per unit.
  • City of Philadelphia weatherization programs: Provides free or low-cost home upgrades to improve energy efficiency.

Why upgrade your HVAC now?

  • Immediate savings on utility bills: Modern HVAC systems lower monthly energy consumption, especially with Philadelphia’s variable weather.
  • Environmental benefits: Energy-efficient systems reduce your carbon footprint.
  • Avoid future price hikes: HVAC installation costs are expected to rise due to labor and equipment shortages.

Get started with Boyle Energy

At Boyle Energy, we specialize in energy-efficient HVAC installations in Philadelphia and surrounding areas. Whether you need a mini split AC installation or a complete system replacement, our expert technicians ensure your upgrade is eligible for federal tax credits and rebates.

Call Boyle Energy at 610-347-5197 to schedule a consultation today. Maximize your savings with federal incentives and enjoy a comfortable home year-round!

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OIL CERTIFICATIONS

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Certificates

OIL CERTIFICATIONS

  • Protecting your Customer Base
  • Codes and Standards for the Installation of Oil-Fired Equip.
  • Energy Future Seminar – The Changing Oil picture for 2007

PROPANE CERTIFICATIONS

  • Basic Principles and Practices
  • Bobtail Delivery Operations and Cylinder Delivery Combo
  • Basic Plant Operations
  • Designing and Installing Exterior Vapor Distribution Systems
  • Gas Check
  • Cylinder Requalification

Certificates

OIL CERTIFICATIONS

  • HM-126F & Hazmat Security Awareness
  • NORA Gold – Oil Tank Installation & Maintenance
  • Superior Customer Service &  Selling Skills
  • Getting Lean and Mean Management

Propane CERTIFICATIONS

  • Basic Principles and Practices
  • Basic Plant Operations

Certificates

OIL CERTIFICATIONS

  • Hm-126F & Hazmat Security Awareness
  • NORA Gold -Oil Tank Installation & Maintenance
  • Superior Customer Service & Selling Skills
  • Getting Lean and Mean Management

HVAC CERTIFICATIONS

  • Basic Principles and Practices
  • Basic Plant Operations

Certificates

OIL CERTIFICATIONS

  • HM-126F & Hazmat Security Awareness

PROPANE CERTIFICATIONS

Basic Principles and Practices

Certificates

OIL CERTIFICATIONS

  • Silver Certification
  • Electrical/ECM Workshop for the Oil Heat Technician
  • Advanced Oil Heat
  • HM-126F & Hazmat Security Awareness Training
  • Oil Burner Set-Up & Installation
  • Codes and Standards for the Installation of Oil-Fired Equip.
  • Nora Tank Seminar
  • Combustion Technology

HVAC CERTIFICATIONS

  • Basic Air Conditioning & Heat Pumps
  • Air Conditioning Troubleshooting & Air Flow
  • Steam Heat
  • Field Controls Venting for the Future
  • Burnham Boiler Installation & Systems Piping
  • Boilers and Controls
  • Hydronics Step by Step
  • 2-Day Residential Load Calculations
  • Colors of Heat/Hydronic Syst
  • Airflow
  • Fundamentals of Piping 101
  • Basic Electrical and Controls Seminar
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  • Protecting your Customer Base
  • Nora Tank Seminar
  • Combustion Technology
  • Combined Compliance Seminar
  • PPMCSA Summer Conference
  • Roth Tank
  • Federated Risk Management

HVAC CERTIFICATIONS

  • Basic Air Conditioning and Heat Pumps
  • Hydronics Step by Step Section 1
  • Color of Heat/Hydronic Syst.
  • Airflow
  • High Efficiency Gas Hot Air
  • Gas Codes and Standards
  • Basic Air Conditioning & Heat Pumps
  • Crown Boiler Hydronics
  • Commercial Burner Beckett Program
  • Drug & Alcohol Awareness Supervisory
  • NFPA Standards
  • Combined Compliance
  • EPA Lead Safe Certified of Section 402 of TSCA

PROPANE CERTIFICATIONS

  • Basic Principles and Practices
  • Bobtail Delivery Operations and Cylinder Delivery Combo
  • Basic Plant Operations
  • Designing and Installing Exterior Vapor Distribution Systems
  • Designing and Installing Interior Vapor Distribution Systems
  • Placing Vapor Distribution Systems and Appliances into Operation
  • Placing VDS into Operation
  • Basic Electricity for Propane Appliance
  • Gas Check
  • Cylinder Requalification
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