Tax Incentives

Consumer Tax Incentives - Home Heating & Cooling Equipment

Federal Tax Credit Levels For 2011

"Middle Class Tax Relief Act of 2010" HR4835 was signed into law.  Included in the bill was a 1-year extension of 25c Tax Credits.

Unfortunately, the tax credit amounts for qualifying homeowners were reduced to pre-ARRA amounts, and the lifetime maximum rebate amount is now $500.

In 2011 qualifying product efficiencies and rebates will be as follows:

Gas Furnace - 95% AFUE                                                  $150

Split Systems

Air Conditioners - 16 SEER/ 13 EER                             $300

Heat Pumps - 15 SEER/ 12.5 EER/ 8.5 HSPF                 $300

Package Systems

Air Conditioners - 14 SEER/ 12 EER                             $300

Heat Pumps - 14 SEER/ 12 EER/ 8 HSPF                      $300

Gas/ Electrics - 14 SEER/ 12 EER                               $300

Advanced Main Air Circulating Fan                                       $50

Geothermal Heat Pumps

What are the tax incentives for geothermal heat pumps?

As part of the Emergency Economic Stabilization Act of 2008, an incentive was added for geothermal heat pump property. The incentive for businesses is available from Oct. 3, 2008 through December 31, 2016, and for residential installations the incentive is available for units placed in service starting January 1, 2008 until December 31, 2016. Qualified geothermal heat pump property refers to any equipment which uses the ground or ground water as a thermal energy source to heat the taxpayer's residence, or as a thermal energy sink to cool the residence. The unit must meet the requirements of the Energy Star program* which are in effect when the heat pump is purchased.

The residential incentive covers 30% of the expenditures in the year the incentive is taken, up to a cap of $2,000 if the property was installed prior to January 1, 2009. Qualifying geothermal heat pump property installed after December 31, 2008 is eligible for 30% of the installed cost without a cap, as provided under the American Recovery and Reinvestment Tax Act of 2009 (ARRA) . The incentive is available for taxpayers installing qualifying equipment at their primary residence or a second home, but not for a rental property.

Two options exist for the commercial incentive. An investment tax credit of 10% of the installed cost is available through 2016. The ARRA legislation also provides the option of taking a grant in lieu of the credit, worth 10% of the installed costs for equipment placed in service during 2009 and 2010.

Click here to access IRS guidance on qualifying energy-efficient property.

To apply for the incentive, use IRS form 5695.

Taken From: Tax Incentives Assistance Project (TIAP)