Tax Savings Alert: Things to Know about the New HVAC Tax Credit

As Benjamin Franklin once famously said: “In this world, nothing can be said to be certain, except death and taxes.” Unfortunately, this is very true. For better or worse, taxes are a part of our society and are a necessary evil to maintain and develop a multitude of things.

There has been a lot of confusion regarding the governmental HVAC tax credit program. We here at Upton Air thought we’d clear up some of the confusion surrounding the issue and provide answers and clarification to some of the more confusing aspects, as well as some tips to save money. Read on for the essentials on what to know.

Yes, You Can Get a Tax Credit by Getting an HVAC Repair or Installation

It’s true: you can get a credit on your taxes on eligible HVAC repair and installations. Having your home be energy efficient is not only something that benefits you, but it also helps providers of energy save money and resources heating and cooling your home. 

Naturally, then, the government wants to promote the installation and repair of efficient equipment. Government programs, like Energy Star, exist for the sole purpose of promoting energy efficiency. Primary residences can apply for tax credits in the form of 10% of the cost up to $500 (or a specific amount from $50-$300).

However, one thing to note is that new homes and rental homes are not eligible for the tax credit, only existing homes that are your principal residence.

Federal Tax Credits for Residential Energy Efficiency Have Been Extended Until the End of 2021

Originally ending on 12/31/2017, nonbusiness energy property tax credits have been extended until 12/31/2021, making the remaining months in the year an excellent time to get repair or installation done in your home.

Additionally, tax credits for renewable energy products are available through 12/31/2023. This includes geothermal energy. Note: we at Upton Air don’t perform geothermal repair or installation; we simply wanted to provide you with this information for your benefit.

There Are Several Items Eligible for a Tax Credit

Not just one item is eligible for a tax credit; a handful of systems are. Here are four of the most used ones.

Air Conditioning Units

Air conditioning is critical in keeping your home’s temperature to a reasonable level during the hotter months of the year. Summer, especially, can be brutal.  

Having your air conditioning repaired or upgraded may not only keep you cooler but may also save you a nice chunk of change. Keeping your air conditioning energy efficient will also come with the bonus of a tax credit.

Heat Pumps

Responsible for distributing heat to and from your home, heat pumps are an excellent, incredibly efficient way to produce energy. They are also easier to repair and maintain than other forms of heat generation, such as baseboard heaters. 

Having your heat pump repaired or replaced is a great way to improve the ability to distribute heat into and out of your house. As a bonus, you will not only be saving money on your heating bill but also will be able to get some tax credit for doing so.

Hot Water Heater

Imagine it is winter. You want to enjoy a hot bath and then drink some freshly brewed coffee. The problem: your hot water heater is barely producing any hot water lately. 

Having an aging hot water heater may cause issues for the hot water your home can produce. Repairing or replacing your hot water heater will solve this issue, in addition to providing better energy efficiency to your home. The money saved from your bills and the tax credit will be worth it.

Furnace

While a heat pump distributes heat into and out of your home, it’s the furnace’s job to generate the heat and keep your home nice and warm during the cool months. It may be tempting to disregard regular maintenance of your furnace (winter in Sacramento is less brutal than many other cities). Still, you will be regretting it during the peak of winter if it were to malfunction. 

A repair or replacement of your furnace will be highly beneficial to your wallet, as well. Outside of the tax credit, a new or repaired furnace has the potential to save you up to 25% on your heating bill every year!

There Are Rebates for You to Further Save Money, Both Locally and Though Companies

Everyone likes a good discount and rebate. There are a handful of local municipality rebates out there, as well as company-based ones. 

The Sacramento Municipal Utility District (also known as SMUD) has a rebate program on heating and cooling systems for up to $3,000. This is an excellent opportunity to increase the value of your home and save some big bucks while doing so. 

For our customers in Roseville and Lodi, we are happy to let you know that both cities also offer residential rebates on various utilities, HVAC repair and installation being included on their list. 

Outside of rebates from local municipalities, looking to see if your gas and electricity company offers any rebates. For example, Pacific Gas and Electric Company (PG&E) offers rebates on repairs and installations for HVAC equipment, such as heat pump systems.

Upton Air Helps Advise Sacramento on Tax Savings for Heat and Air Issues

We here at Upton Air have been in business since 1983 and are very familiar with not everything related to HVAC but also to save money related to taxes. As a family-owned and operated company, we are more concerned with saving you money than trying to figure out the best way to nickel-and-dime you. If we can help you save money, that means we’re doing our job right. 

We understand that money is a limited resource, so we want you to save as much money as possible. If you have any questions about taxes and tax savings, please feel free to get in touch with us, and we’ll see what we can do for you!