Tax Credits

by Tom Olecki, Owner, Broadview Heating

Federal tax credits for qualifying heating and air conditioning systems are again available if in fact you have upgraded you HVAC system or water heater during 2023.

Though in no way am I an expert on federal taxes, the Inflation Reduction Act of 2022 is again available on Energy Star Rated furnaces, air conditioners, heat pumps, boilers, geothermal and hot water tanks.

The credits have no lifetime dollar limits so you may claim the maximum amount every year that the qualified improvement is made, through 2032. The maximum credit per year stands at $3,200.

In the past you were able to credit 10% off the installation of qualified installations, but this act has raised the percentage to 30%.

The Qualifying Efficiency Levels and the credit are as follows:

Central A/C (Split-System): >=16 SEER2 Energy Star Rated 30% of the project up to $600.

  • Air Source Heat Pump >=16 SEER2 >=10 EER2 Energy Star Rated 30% of the project up to $2,000.
  • Boilers (Natural Gas/ Oil/Propane): >=95% AFUE 30% of the project up to $600.
  • Furnaces (Natural Gas/ Oil/ Propane): >=97% AFUE Energy Star Rated 30% of the project up to $600.
  • Geothermal: 30% for units placed in service between 12/31/21 and 1/1/33
  • Water Heaters (Gas, Oil Propane) UEF >= 0.81 for tanks less than 55 gallons and UEF >=0.86 for tanks greater than or equal to 55 gallons
  • Electric Heat Pump Water Heater-Energy star rated  30% of project cost up to $2,000.

Electric fuse panel upgrade: 30% of project cost up to $600 with the following requirements:

  1. is installed in a manner consistent with the National Electric Code,
  2. has a load capacity of not less than 200 amps,
  3. is installed in conjunction with, and enables the installation and use of:
    • any qualified energy efficiency improvements, or
    • any qualified energy property (heat pump water heater, heat pump, central air conditioner, water heater, furnace or hot water boiler, biomass stove or boiler)

Qualifying unit must have been purchased between 1/1/23 and 12/1/32. You should be able to claim the credit on this year’s tax return if in fact you had qualifying equipment installed last year.

With this credit available until the end of 2032, combined with manufacturer rebates, this will be a great year to replace your aging heating or cooling system.

For more information see your tax advisor.

Tom Olecki, Owner, Broadview Heating

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Opinions and claims expressed above are those of the author and do not necessarily reflect those of ScripType Publishing.