HVAC Energy Efficiency Tax Deductions


Your HVAC system is designed to keep you comfortable, but did you know it could also save you money on your taxes? As an incentive to encourage lower energy usage in homes, the US Federal Government offers a tax credit for anyone who has purchased efficient heating and cooling products in since 2012. This program is known as the 25C heating and cooling equipment tax incentive, and it’s worth considering if you’ve recently bought an efficient HVAC system, water heater equipment, or made certain energy efficiency improvements to your home. Of course, you won’t get the credit unless you claim it, so read on to see if you qualify.

What is the Incentive?

Anyone who has made energy related improvements to their home between January 1, 2012 and December 31, 2016 may be eligible for tax credits. That means that unless the government extends this incentive to 2017, you may be better off buying a new HVAC unit or water heater before the end of the year. Not every product qualifies for the tax credit, so be sure to read packaging closely when making a purchase. You can see which products are eligible for the tax deduction on Energy Star’s guide to tax credits.

How much can you save?

Homeowners may receive a credit of 10 percent of their qualified energy-efficient improvement costs. There is a maximum credit amount of $500, and it’s one of the most generous tax deductions available to residential taxpayers. If you aren’t sure whether your purchases will reach that $500 mark, try to remember any purchases you’ve made since 2012, because the credit allows for retroactive claims up to four years. Think broadly about your purchases, because the tax credit doesn’t just apply to HVAC units – insulation, doors, windows, and certain roofs may count towards a deduction.

What Other Incentives Are Available?

The federal heating and cooling equipment tax incentive applies to all Americans, but you may qualify for local tax deductions or rebates as well. Many local governments and energy companies have cost savings programs that you may have never considered. Check out the Database of State Incentives for Renewables and Efficiency® to see some of the incentives available in your region. You can easily filter by state, sector, program type, and more to find a deduction that you’d otherwise miss out on. You might be surprised by how much extra cash you can keep each year.

Tax deductions are just one reason to purchase an energy efficient heating and cooling system. An energy efficient HVAC system won’t just save you money on your utility bill; it will have a longer lifespan than less efficient options. You are much less likely to experience breakdowns, and that means one less headache to deal with when it’s ten degrees below zero. For your next HVAC purchase, consider the costs over time, rather than the sticker price itself. If you have questions about tax deductions on HVAC products, don’t hesitate to contact our team.

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