California homeowners looking to upgrade their HVAC equipment will be happy to know that there are many available tax incentives and rebate programs that can help make the cost of their installation project more affordable. Thanks to the Inflation Reduction Act of 2022, homeowners can now upgrade to more energy-efficient systems at a more affordable price, allowing them to reap the benefits of ongoing savings that these more efficient units offer.
But what programs are available, which HVAC systems qualify, and how can homeowners take advantage of these special savings? In this blog post, we’ll answer all of these questions and more to help you make the most informed decision for your upcoming installation needs.
Understanding Federal Tax Credits for HVAC Services in California
The federal government offers tax incentives for California homeowners who choose to upgrade their HVAC equipment to high-efficiency heating and cooling systems. Under this program, heating and air conditioning installations that take place before December 31, 2032, may qualify for different tax credits depending on the type of equipment that’s installed:
- Central Air Conditioners & Heat Pumps: Qualify for a $300 tax credit
- Gas Furnaces: Qualify for a $150 tax credit
It’s important to note that these incentives only apply to installations performed on primary residences — not new home builds or rental units. Eligible homeowners may reap these incentives at the time of their tax filing. Be sure to consult with a tax professional to ensure you satisfy the eligibility criteria.
State Tax Incentives for AC & Heating Systems
Along with federal tax credits, the state of California also offers a variety of rebate programs for local homeowners. These include:
- Home Performance Program: Through the Sacramento Utility District, homeowners can receive up to $3,000 for heating and cooling packages.
- Smart Thermostat Rebate: Southern California Edison offers homeowners a $75 rebate, while Pacific Gas and Electric offers rebates ranging from $50 to $120 on smart thermostat installations.
- Heat Pumps & AC Rebates: Burbank Water and Power offers up to $1,500 for replacing older, inefficient AC systems. Los Angeles Department of Water and Power also offers a $100 to $120 per-ton rebate program to incentivize the installation of high-efficiency heat pumps and air conditioners.
Qualifying HVAC Systems & Models
In order to qualify for these tax incentives, HVAC systems must satisfy certain energy-efficiency criteria. Below are the key considerations to keep in mind when selecting an eligible unit:
- Furnaces: Any ENERGY STAR® rated new furnace with an AFUE rating of .90 or higher may qualify for a tax credit.
- Heat Pumps: ENERGY-rated heat pumps with a SEER2 of at least 15.2 may be eligible for a rebate.
- Air Conditioners: AC units that are ENERGY STAR® rated with a SEER2 of at least 16 may qualify for certain incentives.
IRA Tax Credits & Rebates
In August 2022, the Inflation Reduction Act was signed into law, further increasing incentives for homeowners looking to make energy-efficient upgrades to their HVAC equipment. Under the program, homeowners will be able to claim a tax credit of up to 30% of the cost of their HVAC replacement projects, including up to $2,000 for heat pump installations.
Along with these tax credits, the IRA promises to establish several new rebate programs. Guidance was provided to each state in July 2023; however, the programs are still in development and are not yet available to homeowners. These rebate programs could begin as soon as January 2024 and may offer rebates as high as $14,000 for income-eligible households.
Additional Savings on HVAC Equipment
In addition to the federal and state tax incentives mentioned above, there are several other ways in which homeowners can save on the cost of their HVAC installations, including:
Manufacturer Rebates
Many heating and cooling equipment manufacturers offer seasonal rebates on select units. For instance, Bryant offers up to $3,000 in rebates on select systems for Livermore area residents. Check with your chosen HVAC manufacturer to see what rebates they offer before scheduling an installation appointment.
Contractor Promotions
At AIS Heating & Air Conditioning, we regularly offer coupons and specials to help homeowners afford the cost of their HVAC service needs. Explore our available specials before booking your next HVAC replacement appointment.
Local County-specific Incentives & Rebates
As a BayREN Participating Contractor, AIS is proud to offer local Livermore area residents even greater savings on their heat pump installations. Through the BayREN Home+ Rebate Program, homeowners can make energy-saving home upgrades without extending their budget. Families may be rewarded up to $5,000 in rebates simply by replacing their HVAC equipment with a more energy-efficient system.
BayREN Home+ rebates are available for both single-family and multifamily property owners, as well as small- and medium-sized businesses throughout the Livermore and surrounding Bay Area.
Save on Your HVAC Installation with AIS
If you’re planning an HVAC replacement project in the near future and aren’t sure how to maximize your savings, trust the team at AIS to help you through the process. Our team is well-versed in federal, state, and local tax incentives, allowing us to help you navigate the eligibility requirements and application process so you can save as much as possible on your comfort needs. With our reliable, trustworthy, and knowledgeable team by your side, you’ll enjoy increased comfort and energy efficiency without breaking the bank.
Schedule your HVAC replacement service with AIS today by calling our team at (510) 792-4328
