If you’re considering a new HVAC system for your Grand Junction, CO, home, you already know it’s a significant investment. As a result, budgetary constraints may heavily influence your choice of system. However, saving money upfront on an HVAC often comes at a price further down the road. It often comes via higher heating and cooling bills throughout the life of your system. The good news is that there are ways to cut the cost of certain new HVAC systems and stretch your budget. One of the best ways to reduce your total cost of ownership of a new system is to take advantage of available tax credits. Here is the information you need to determine which HVAC systems qualify for tax credits.
Air-Source Heat Pumps
One of the most significant tax credits available for a new HVAC system applies to air-source heat pumps. They offer heating and cooling from a single system and operate solely on electricity. The reason for the tax credits is that heat pumps are among the most efficient HVAC options around. In mild climates, heat pumps can achieve efficiencies of up to 400%. Some cold-weather models come close to those efficiency levels, even in frigid weather. Therefore, policymakers want to encourage their adoption as much as possible.
Currently, you may be eligible to claim a tax credit worth 30% of the cost of a new air-source heat pump. However, the credit does have a maximum of $2,000. Plus, it’s non-refundable, so you may need to consult a tax professional to maximize its benefit. You should also know that the tax credit has a sunset date at the end of 2034. That means it only counts towards a system purchased between now and then. The same goes for all the other tax credits discussed in this article.
Which Air-Source Heat Pumps Qualify
To claim the tax credit for an air-source heat pump, it must meet some minimum efficiency standards. It must be ENERGY STAR certified and fall into the program’s Most Efficient category. That list includes both central ducted heat pumps and ductless mini-split systems. So, no matter which type you need, you’ll easily find a system that qualifies for the tax credit.
Geothermal HVAC Systems
The only HVAC systems that routinely outperform air-source heat pumps in efficiency are geothermal HVAC systems. They’re heat pumps, too, but they use a buried ground loop to exchange heat instead of relying on open air. As a result, geothermal HVAC systems can reach efficiencies of 600% or more. Unfortunately, installing one can cost up to $30,000 and requires significant space for the ground loop on your property. The good news is that they can last twice as long as other HVAC system options.
Fortunately, geothermal HVAC systems also qualify for generous tax credits, which help reduce their costs. Like air-source heat pumps, geothermal systems are eligible for a non-refundable tax credit worth 30% of their total cost. However, the credit has some critical differences from the one covering air-source heat pumps. One is that there’s no maximum dollar value on the credit. The other is that you can carry the credit forward over several years to maximize its benefit.
Which Geothermal HVAC Systems Qualify
In short, virtually every geothermal HVAC system available today qualifies for the tax credit. There are only two significant requirements. One is that the system uses a ground or underwater loop as its thermal energy source. The other is that the system has an ENERGY STAR certification.
Central AC Systems
Another tax credit that applies to new HVAC systems covers energy-efficient central ACs. Similar to the air-source heat pump credit, it’s worth up to 30% of a new air conditioner’s cost. However, it has a more restrictive maximum value limit of $600. Additionally, the credit is non-refundable, and it can’t be carried over to multiple tax years.
Which Central AC Systems Qualify
Only high-efficiency central AC systems qualify for a tax credit. A split-system AC must have a SEER2 rating of at least 17 and an EER2 of at least 12 to qualify. A packaged AC system needs a SEER2 of at least 16 and an EER2 no lower than 11.5.
Gas-Fired and Oil-Fired Furnaces
Some natural gas-fired and oil-fired furnaces also qualify for a tax credit. Their credit is identical to the one offered on central AC systems. It’s worth up to 30% of your system cost, with a maximum value of $600. It’s also non-refundable, and you cannot split it across multiple tax years.
Which Gas-Fired and Oil-Fired Furnaces Qualify
Unfortunately, many of the gas furnaces on the market don’t qualify for a tax credit. Only those with AFUE ratings of 97% or higher qualify. Such systems are condensing furnaces, and many feature multi-stage or variable-speed operation. As such, they’re among the most expensive models on the market.
The tax credit qualifications for oil-fired furnaces are more complex. For starters, you’ll need a system that is ENERGY STAR qualified. Only oil furnaces with AFUE ratings above 85% can meet that standard. Plus, the oil-fired furnace must have a manufacturer certification attesting to its compatibility with biofuels. It must be stated that the furnace can safely operate with oil blends containing up to 20% biodiesel, renewable diesel, or second-generation biofuel.
It’s worth pointing out that gas-fired and oil-fired boilers also qualify for this tax credit. They must meet the same minimum efficiency and fuel standards as their respective furnace variants. Even if your home has a hydronic heating system, you may still be able to replace it while reaping tax advantages.
Dual-Fuel HVAC Systems
With several frigid months yearly in Grand Junction, you may hesitate to choose a heat pump. Despite newer heat pumps offering excellent cold-weather performance, you may still prefer a furnace. The good news is that you can have your cake, eat it, and claim a tax benefit while doing so. To do it, you can choose a dual-fuel HVAC system. If you’re unfamiliar with them, dual-fuel HVAC systems combine a heat pump with a gas furnace for auxiliary heat. It’s a best-of-both-worlds approach that guarantees efficient comfort even in the coldest winter.
Dual-fuel heat pumps are the only HVAC system type that lets you claim two credits simultaneously. You can claim up to $2,600 in tax credits by choosing a high-efficiency heat pump and furnace. The qualifications for each system remain the same as those described above for each system individually.
Local Efficiency HVAC Experts
If you’re interested in a new, efficient HVAC system, Home Comfort Services can help. We sell and install heat pumps, ductless mini-splits, and geothermal HVAC systems. Additionally, we offer high-efficiency central air conditioners and furnaces. We can even offer you financing on approved credit to help you pay for the system you want. And all our system installations come with a 100% satisfaction guarantee.
We’ve served local homeowners since 2016, building a reputation for quality workmanship in that time. That’s earned us a long list of five-star reviews from our satisfied customers. So, if you’re ready for a new HVAC system for your Grand Junction home, contact Home Comfort Services today!
