Upgrading your home with a new HVAC system is never cheap. Many homeowners put off replacing their heating or air conditioning systems for far too long simply because of the high cost. The good news is that there are several ways you can save when installing a new HVAC unit, and this guide will explain all of the HVAC tax credits and rebates available to Florida homeowners in 2024.
2024 Federal HVAC Tax Credits
When the US Congress passed the Inflation Reduction Act of 2022, they established a new HVAC tax credit program. Known as the Energy Efficiency Home Improvement Credit, this program entitles homeowners to a tax credit worth up to 30% of the total cost of purchasing and installing a new high-efficiency HVAC unit. This program started at the beginning of 2023 and is set to continue until at least the end of 2032. As of now, the tax credits are set to continue after 2033, but the amount will start to decrease annually after the end of 2032.
To qualify, your new unit must be installed by a licensed, certified HVAC company and meet specific minimum energy efficiency requirements. This tax credit is available for gas furnaces, central air conditioners and heat pumps. However, the amount of tax credit you will be eligible for depends on the type of unit you install and how much the total installation costs.
To claim the tax credit for your new HVAC unit, you will need to fill out IRS tax form 5695-Residential Energy Credits Part II and submit it when you file your tax return. You also need to make sure that you have the relevant receipts or invoices proving the date and total cost of the installation. It’s also necessary to keep the documentation from the manufacturer showing that the unit meets the energy efficiency requirements. You won’t need to include these documents when you submit your tax return forms, but you will need to be able to show them if your tax return gets audited. If not, the IRS will likely reject the credit and you’ll end up missing out on anywhere from a few hundred to up to $2,000.
Central Air Conditioner and Furnace Tax Credits
If you install a qualifying central air conditioner or furnace, you will be eligible to receive a credit of up to $600 when you file your taxes the following year. These credits are capped at a maximum of $1,200 a year, which means you could receive the full amount if you installed both a new furnace and AC. This portion of the tax credit program also applies to certain home efficiency improvements such as installing new windows and doors, insulating, air sealing, etc. However, all the upgrades covered under this part of the program are still capped at a maximum of $1,200 per year.
The energy efficiency requirements necessary to qualify are set by the Consortium for Energy Efficiency, which requires that any new unit meets specific requirements in terms of its SEER or AFUE rating. That said, any unit that is currently ENERGY STAR certified will qualify. However, it is important to note that the Consortium for Energy Efficiency generally sets new standards every year. This means that a furnace or AC that qualifies for the tax credit program in 2024 may not necessarily qualify in 2025 since the standards could increase.
Heat Pump Tax Credits
The US Department of Energy has been actively trying to encourage American homeowners to install electric heat pumps since they are the most energy-efficient heating option currently available. As part of this push, the Inflation Reduction Act established a much larger tax credit for heat pumps that can be worth up to $2,000. This tax credit is still capped at a maximum of 30% of the total installation cost, which means you’ll only qualify for the maximum amount if your heat pump installation costs $6,665 or more.
Since heat pumps can both cool and heat, there are specific requirements in terms of both cooling and heating efficiency for new heat pumps to qualify. These requirements also vary by region and are slightly stricter in the Southeast and Southwest US than they are for the Northern region. In Florida, a new heat pump must be at least 15.2 SEER2 and 7.8 HSPF2 to qualify for a tax credit. As with furnaces and AC units, these requirements may rise in the coming years.
This part of the tax credit program also applies to other appliances like biomass boilers and electric heat pump water heaters. However, the total maximum for this part of the program is still $2,000 a year.
Are There State HVAC Rebate Programs in Florida?
Along with the new HVAC tax credit program, the Inflation Reduction Act also created two new HVAC rebate programs: the High-Efficiency Electric Rebate program and the Home Energy Performance Based, Whole House Rebate (HOMES) program. These two programs allocated $8.8 billion that is set to be distributed to each state on a per capita basis starting in 2024. However, Florida Governor Ron DeSantis rejected this federal funding by declining to enroll the state in these programs. As a result, more of the allocated funds will go to the other states that enrolled in the program. It also means that low- and middle-income Florida families who install high-efficiency HVAC units or make other energy-efficiency upgrades will miss out on rebates that could be worth anywhere from a few hundred to more than ten thousand dollars.
Other Available HVAC Rebates
Some utility companies in Florida also have rebate programs available to their customers who install new HVAC units. These rebates are mostly only available when installing a high-efficiency heat pump or central air conditioning system. Depending on your utility provider and the efficiency rating of your new unit, these rebates could save you anywhere from $100 to more than $1,500. However, any utility rebate you receive for your new unit may count against the federal tax credit you’re eligible for. This is because you must subtract any rebates that you receive from the total installation cost when filing for the federal tax credit.
A new heat pump that costs you $7,000 would normally qualify for the full $2,000 tax credit. However, if the utility rebate drops the total cost below the $6,665 threshold, you would only receive 30% of the adjusted cost and not the full $2,000. The good news is that these rebates come directly to you in the form of a check instead of simply a credit or deductible that you can apply against however much you owe to the IRS in taxes.
If you’re looking to upgrade your heating or air conditioning and take advantage of the available tax credits and rebates, J&W Heating and Air + Plumbing is ready to help. We offer a range of heat pumps, ACs and furnaces that will qualify for the various programs, and our expert technicians can help you select the best unit for your home. With more than 55 years of experience, we’re also the best choice for HVAC repair and maintenance in the Jacksonville area. For more information on the ways you can save on your new HVAC unit or to schedule an installation consultation, contact the experts at J&W Heating and Air + Plumbing today.
