Cleveland HVAC Blog

Energy Tax Credits: Could You Qualify and Save?

Posted by Paul Wadsworth on Wed, Mar 20, 2013 @ 11:34 AM

As appealing as the potential savings can be, the up-front costs of high-efficiency HVAC equipment are sometimes a little off-putting. To ease the sticker shock, the federal government offers a number of energy tax credits.

federal tax credits on hvac equipmentOne of these is the 25C tax credit, also known as the Individual Tax Credit for Energy Efficient Residential Improvements and Appliances. First offered in 2005, this credit allows you to claim up to $500 in tax credits for installing qualifying equipment.

Although it expired in 2011, it's since been retroactively reinstated and extended from January 1, 2012, through December 31, 2013. That means you can claim the credit if you installed or plan to install qualifying high-efficiency HVAC or water heating equipment at any time during this period.

Qualifying equipment includes:

  • Furnaces and boilers (maximum $150 credit)Fuel-burning (gas, propane, and oil) furnaces and boilers must achieve an annual fuel utilization efficiency (AFUE) of at least 95 percent to qualify for energy tax credits. NOTE: Furnaces with a high efficiency fan add an additional $50 credit. 
  • Air conditioners (maximum $300 credit) - A qualifying split-system central air conditioner must have a seasonal energy efficiency ratio (SEER) of 16 or greater and an energy efficiency rating (EER) of 13 or greater. Packaged system central air conditioners, the less common type, must meet or exceed 14 SEER and 12 EER.
  • Heat pumps (maximum $300 credit) - To qualify for energy tax credits, an air-source heat pump must have an EER of 12.5, SEER of 15 and a heating seasonal performance factor (HSPF) of 8.5 or higher. Requirements fall to a minimum of 14 SEER, 12 SEER and 8 HSPF for packaged heat pump systems.
  • Water heaters (maximum $300 credit) - A qualifying gas, propane or oil water heater must have an energy factor (EF) of at least 0.82 or a thermal efficiency of at least 90 percent. Electric heat pump water heaters are required to have a minimum EF of 2.0 to qualify.

While the energy tax credits are good incentives to upgrade your HVAC equipment, finding equipment that meets your needs isn't always easy. Also, Energy Star has discovered that even the most efficient unit, if poorly installed, will not deliver anything near it's rated efficiency. So to actually realize all the savings you expect, who installs the unit and how is far more important in the long run.

If you've been considering upgrades, but you'd like some expert help choosing the right models and then get the proper installation, contact us at P.K. Wadsworth Heating & Cooling. We've proudly served homeowners throughout Greater Cleveland since 1936- covering four generations of the Wadsworth family.

Federal Tax Credits

Paul WadsworthPaul Wadsworth is the President and Owner of P.K. Wadsworth Heating and Cooling. For 37 years, Paul has been providing heating and cooling services to the Greater Cleveland area. P.K. Wadsworth has been a trusted Cleveland HVAC service company for 75 years. The company understand the area's construction and local heating and air conditioning needs. Paul has an MBA from the University of Michigan and a B.S., Industrial Engineering from Purdue University. He's been President of the Cleveland Air Conditioning Contractors of America and a founding member of the local chapter. Paul was born and raised in Cleveland and has been active in the local community. He resides in Cleveland, Ohio with his wife and two sons.

The opinions and statements contained in this article are for general informational purposes only and are not instructions. Only trained, licensed and experienced personnel should attempt installation/repair. The author assumes no liability for the opinions/statements made in this article. Any individual attempting a repair or installation based on this article does so at their own risk of loss.

Topics: Energy Star, Energy Tax Credits, federal tax credits, air conditioners

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