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:
- Obtain receipts and certification: Keep receipts from the installation and a manufacturer’s statement of eligibility.
- File IRS Form 5695: This form documents your residential energy-efficient property credit.
- 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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Patrick Boyle brings over three decades of expertise to Boyle Energy, carrying forward a family legacy that began with his grandfather, Joseph Boyle Sr., the company’s founder. With extensive technical proficiency, Patrick holds advanced certifications in both oil and HVAC systems, ensuring the highest standards of service and performance. Additionally, he is recognized as an NPGA-certified propane service professional, underscoring his commitment to safety and industry best practices. Under his leadership, Boyle Energy continues to deliver reliable and efficient energy solutions, grounded in generations of trust and innovation.