Tax Credits
Residents in Western New York, can benefit from several tax credits and rebates when installing, replacing, or tuning up their HVAC or generator systems.
Inflation Reduction Act (IRA) Federal Tax Credits
Homeowners can claim up to 30% of the cost for energy-efficient home upgrades through two major programs:
- Residential Clean Energy Credit: Covers installations like geothermal heat pumps, providing up to 30% in tax credits. Heat pumps are especially popular in New York, where homeowners have claimed significant savings on their energy-efficient upgrades.
- Energy Efficient Home Improvement Credit: This can cover up to $3,200 annually for various improvements, including HVAC system upgrades like air-source heat pumps, with a maximum of $2,000 per year for heat pumps and $600 for electrical panel upgrades.
These incentives aim to lower the upfront costs of making homes more energy-efficient while promoting long-term savings.
Tax Section 25C, Nonbusiness Energy Property Tax Credit
Effective Jan 1, 2023: Provides a tax credit to homeowners equal to 30% of installation costs for the highest efficiency tier products, up to a maximum of $600 for qualified air conditioners and furnaces, and a maximum of $2,000 for qualified heat pumps.
The 25C federal tax credit was amended for 2023 and will remain effective until Dec. 31, 2032.
The Energy Efficient Home Improvement Tax Credit (25C) provides a federal tax credit to homeowners who install high-efficiency equipment, this includes HVAC equipment. The previous Nonbusiness Energy Property credit of up to $500 was extended through 2022. The amended Energy Efficient Home Improvement Credit , which begins in 2023 and extends through 2032, increases the tax credits as high as $600 for qualified air conditioner or gas furnace, and up to $2000 for qualified heat pump, heat pump water heater or boiler.
Tax Section 25D, Residential Energy Efficient Property
Provides a tax credit to homeowners equal to 30% of installation costs for ENERGY STAR® geothermal heat pumps until 2032. That percentage drops to 26% in 2033 and 22% in 2034.