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Tax Credits for High-Efficiency Systems: A Sizable Perk for Homeowners Buying New HVAC Systems

  • June 25, 2013

The tax credits for high-efficiency systems are back, which is good for homeowners in our region, and across the country. The federal credits apply to furnaces, boilers, air conditioners and heat pumps purchased and installed in 2012 and 2013. These credits help offset the cost of converting to more efficient HVAC equipment, which will benefit you directly for years to come.

The program, called 25C, came back after the federal government took steps to avoid the “fiscal cliff.” The minimum efficiency standards for the qualifying systems include:

  • Furnaces and boilers – These must have a minimum AFUE (annual fuel utilization efficiency) of 95 percent, which means that they waste just 5 percent of the fuel they consume. The current minimum currently stands at 78 percent AFUE, so upgrading lowers fuel bills substantially, since a 78 percent system wastes 22 percent of the fuel.
  • Heat pumps – The minimum SEER (seasonal energy efficiency ratio) must be at least 15 with a HSPF (heating seasonal performance factor) of 8.5.
  • Split-system air conditioners – The qualifying efficiency for a split system’s air conditioner rose to 16 SEER.
  • Package-system air conditioners – This minimum rose to 14 SEER.
  • High-efficiency blower motors – These cannot consume more than 2 percent of all the electricity the blower uses.

The caps on the amount of tax credits for high-efficiency systems are limited to 10 percent of the cost of the product and its installation, with a maximum of $300 for heat pumps and air conditioners and $150 for furnaces. The maximum that homeowners can claim for installing a highly efficient blower motor is $50.

The 25C tax credit also has a lifetime cap of $500 that includes all credits for energy efficiency improvements claimed for tax credits at the federal level that date back as far as 2005. Regardless of the limits, it makes financial sense to make these improvements to homes because they save energy year-round.

If you would like more information about the tax credits for high-efficiency systems, contact Comfort Services, Inc. today.