Tax Credits for Replacing a New HVAC System in PA

Take Advantage of Energy-Efficient Upgrade Incentives

As the U.S. continues to move toward a clean energy future, more and more homeowners are turning to energy-efficient HVAC upgrades to do their part while benefiting from operating cost savings.

Luckily, the federal government is incentivizing these updates with HVAC tax credits available nationally. As a result, homeowners can save significantly on the installation of newer, more efficient furnaces, heat pumps, boilers, geothermal systems, and more.

In this blog post, the home comfort experts at Signature HVAC outline the savings available to Pennsylvania homeowners tackling replacement projects to ensure they’re getting the best value on their new equipment.*

An Overview of Tax Credits for Energy-Efficient HVAC Systems

In 2022, the Inflation Reduction Act (IRA) created federal tax credits for homeowners in the U.S. who make upgrades that support a future of clean energy. This includes energy-efficient HVAC systems that can improve your comfort and lower your energy bills.

Thanks to these incentives, homeowners can offset the initial cost of a new home comfort system while helping reduce their carbon footprint.

Eligibility Requirements & How To Qualify for Tax Credits

From now through 2032, homeowners can claim up to $3,200 a year in tax credits for energy-efficient projects. Incentives include:

• ENERGY STAR® air-source heat pumps with minimum EER2 or 10: 30% of the cost up to $2,000
• ENERGY STAR gas furnaces with a minimum AFUE of 97%: 30% of the cost up to $600
• ENERGY STAR boilers with a minimum AFUE of 95%: 30% of the cost up to $600 
• ENERGY STAR central AC with a minimum SEER2 of 16: 30% of the cost up to $600
• ENERGY STAR geothermal heat pumps: 30% of the cost with no cap

Additional Rebates & Incentives Beyond Tax Credits

Federal tax credits aren’t the only way homeowners can save on energy-efficient upgrades. Local incentives include:

• Pennsylvania’s FirstEnergy offers rebates of up to $650 on air-source heat pumps, central ACs, ductless mini-splits, and geothermal heat pumps.
• The Pennsylvania Housing Finance Agency’s Homeowners Energy Efficiency Loan Program offers loans of $1,000 to $10,000 at a fixed rate of 1% for 10 years for energy-efficient repairs.
• PECO Energy Company offers up to $300 for air-source and ductless heat pumps, $600 for furnaces, and up to $1,000 for boilers.

Step-by-Step Guide To Claim Tax Credits on Your PA State & Federal Tax Return 

It’s important to ensure that your tax credits are claimed properly when you replace your system. Follow these simple steps:

• Make sure to save all receipts of your HVAC purchase and installation costs with clear dates, along with the manufacturer’s certification that verifies the system’s energy efficiency.
• Download the Residential Energy Credits Form 5695 from the IRS website to include with your regular 1040 tax return.
• Make sure to claim your tax credit the same year that the upgrade was installed in order to be eligible.
• Check current IRS guidelines to determine how much of the installation cost you can claim.
• Retain all documentation for at least three years in case of an audit.
• Consider working with a tax professional to ensure the process is completed properly.

Schedule HVAC Replacement in PA

With federal tax credits and local rebates, there’s never been a better time to invest in a new, highly efficient system. Turn to Signature HVAC’s fully trained, NATE-certified experts.

We’re proud to offer a wide range of energy-efficient systems for West Chester-area homeowners and provide superior service backed by our 100% satisfaction guarantee. Take advantage of our HVAC financing options for your additional benefit.

Contact us today to schedule an HVAC replacement consultation for your West Chester home.

*Consult with your trusted tax professional before taking advantage of any of these listed incentives to ensure you’re eligible.