Purchasing a new heat pump system in California might seem expensive at first, but the long-term energy savings and reduced impact on the environment is more than worth the investment. In addition to long-term financial gains, the Inflation Reduction Act sees tax credits given to California residents who opt to replace their current HVAC system with a heat pump. Magnolia Heating and Cooling knows all of the ins and outs of federal and state HVAC and heat pump tax credits to make sure that you’re saving the most money possible!
Federal Heat Pump Tax Credits
The United States government currently offers tax credits to homeowners who make the move to install a high-efficiency heating and cooling system. For example, Energy Star-certified heat pumps and central air conditioners quality for a $300 tax credit, while the equivalent certified gas furnaces only get you $150 in savings. To claim a heat pump tax credit, install your system and claim it on your federal return.
The Inflation Reduction Act and Heat Pump Tax Credits
Here’s where things really get interesting: the Inflation Reduction Act “pumps up” heat pumps for all California residents, making them far cheaper to switch over to rather than pony up for a gas replacement. If your household income is below 80% of the area’s median income, you will get the maximum rebate. This means that your new heat pump will be covered 100% up to a total cost of $8,000. If your home’s income falls between 81-150% of your area’s median, you’ll get a 50% rebate instead. Fannie Mae offers a tool on their website to help you find out what your area’s median income is so you can better see how much your heat pump rebate will be.
If your home’s income is above 150% of your area’s median income, then you’re still in luck. The Inflation Reduction Act will see that you get a heat pump tax credit of 30% up to $2,000 for switching over.
Heat Pump Costs and Rebates
The various federal and local heat pump tax credits are significant for the average homeowner; the typical cost to install a heat pump in California is between $5,000-$6,000. In most cases, low-income homeowners will be able to switch over to a heat pump for free. It’s estimated that middle-income households will save ~$3,000 on installing their new heat pump system, while high-income households will save ~$1,500.
How to Get a Heat Pump Rebate
The best way to make sure you’re getting the full heat pump tax credit you deserve is to make sure your new system gets installed by a team of HVAC professionals nearby. You can also check the Department of Energy’s website for more information on heat pump tax credit guidelines for each coming year.
Will a Heat Pump Work for Me?
Saving money with the Inflation Reduction Act and other rebates for heat pumps is great, but will a heat pump system work for your needs? Heat pumps operate in temperatures well below freezing and swelteringly hot alike. Their versatility has seen California residents switching over to them in droves.
Save the Most Money Installing a Heat Pump in California
Don’t leave a cent on the table when switching over to a heat pump for your home. Magnolia Heating and Cooling is a top-rated heat pump installation company that makes sure to maximize heat pump tax credits for all customers. If you’re ready to better heat and cool your home while saving some green for yourself and the environment in the process, give us a call or send us an email today!