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There are more incentives for energy efficiency upgrades in Florida than ever before. Installing a high-efficiency central air conditioner, heat pump, or furnace can qualify you for tax credits. Under the Inflation Reduction Act, air conditioners are included. Therefore, now is the right time to consider replacing your older, less efficient HVAC unit.
What Is the Inflation Reduction Act of 2022?
The Inflation Reduction Act (IRA) is in part a federal legislation to help protect the environment. It provides various incentives to invest in energy-saving improvements, and lower the cost of installing, for example, heat pumps. The amount it covers depends on the income level of a household. A heat pump is 100% covered (up to $8,000) for a low-income household. Moderate-income households receive 50% coverage. Homeowners can also receive a credit of up to $2,000 for installing such equipment in any given year.1
The IRA tax credit is set to expire after 2032. But it helps to start thinking about your upgrade now. For geothermal heating installation, the IRA includes an uncapped 30% tax credit (with the average installation being $24,000, the average credit is expected to be around $7,200).1
How Do I Qualify for Federal Tax Credits?
To apply for the tax credit, you must file IRS Form 5695: Residential Energy Credits. In addition to a tax credit for the cost of the project, you can also receive credits on the life of the system. Previously, the lifetime cap was $500. The annual cap has been updated and is now $1,200 to $2,000 depending on the efficiency improvements made.2
You can therefore claim credits for multiple projects. But the overall threshold is $14,000 per household for “qualified electrification projects”. Check the fine details to learn if and how the Inflation Reduction Act air conditioner incentives apply in your situation.1
What About Energy Star Certified Equipment?
You can get additional federal tax credits for HVAC equipment with the Energy Star label. For central air conditioners and air-source heat pumps, you can qualify for a $300 tax credit. If you install a main air circulating fan that uses not more than 2% of your furnace’s energy output, a $50 tax credit may be applied. Certified non-solar water heaters with an energy factor of at least 2.2 can qualify a homeowner for a $300 credit.2
Are There Other Incentives Besides the IRA?
States, local municipalities, and utility companies are also offering incentives for efficiency upgrades. For example, Florida Public Utilities offers residential electric rebates for people who upgrade to energy-efficient heating and cooling systems. You can get a customer rebate of $100 for a heat pump or air conditioner replacement (a central air conditioner must have a minimum 15.0 SEER rating to qualify).3
Many programs are available at many levels. To determine what’s available and what you qualify for, do your research as incentives are being introduced and updated frequently at local levels. Your HVAC installation contractor should know what programs are available and whether you’re eligible for them. It helps to ask when you receive AC service or are considering a replacement.
Contact Tri County Air
You can save significantly with the latest Inflation Reduction Act air conditioner credits. At Tri County Air, we can help select energy-efficient heating and cooling systems for your home. We serve all of Sarasota, Manatee, and Charlotte Counties so understand your home comfort needs. In addition to the newest legislation, learn about more opportunities to save, including our VIP rewards and specials, and take advantage of our financing options and membership plans. Request your appointment online or call 941 485-2222 today.