What Are the Tax Incentives for Buying New HVAC in 2024?

January 15, 2024

Investing in an energy-efficient heating, ventilation, and air conditioning (HVAC) system in 2024 does more than improve comfort in your Idaho home and lower energy costs. It also qualifies you for tax credits.

New, high-efficiency equipment enhances the indoor air quality (IAQ) in your Eagle home and may reduce your carbon footprint. Your aging HVAC system likely is losing efficiency, costing you money, and is less environmentally friendly than their new counterparts.

You do not have to shoulder the entire cost of your new system because the federal government will take money off your taxes to help you pay for it.

Let Western Heating & Air Conditioning be your guide to qualifying high-efficiency HVAC systems and the tax incentives that can help reduce new equipment costs. We are a third-generation family-owned company with a 50-year track record serving residential and commercial properties in Greater Boise.

Our top Better Business Bureau rating and HVAC industry awards tell you all you need to know about our dedication to customer service.

Our qualified team at Western Heating & Air Conditioning can recommend the best high-efficiency HVAC equipment that qualifies for financial incentives and enhances your home. Whether you plan to upgrade your furnace with a more efficient version or replace it with an electric heat pump, you can write off a portion of the cost on your federal taxes.

Federal Tax Credits

The Inflation Reduction Act (IRA) of 2022 makes tax credits available on high-efficiency HVAC units through 2032. It allows you to deduct 30 percent of the purchase and installation costs and caps the amount you can write off:

Air conditioners, furnaces, boilers, and water heaters max out at $600.
The cap on air-source heat pumps, including ductless equipment, and heat pump water heaters is $2,000.
You can claim up to $150 for an energy audit and $600 for an electric panel upgrade.
Get up to $1,200 back for home insulation and a maximum of $600 for windows and skylights.

Geothermal systems and solar panels have no cap, but the 30 percent credit decreases to 26 percent in 2032 and 22 percent in 2033.

Eligibility

All equipment must meet specific guidelines to be eligible for tax credits. For example, gas furnaces must be ENERGY STAR^®certified and have a minimum annual fuel utilization efficiency (AFUE) rating of at least 97 percent. AFUE rates furnace and boiler energy efficiency. The higher the percentage, the more efficient the equipment.

You can find other eligibility requirements at ENERGY STAR. Our talented team at Western Heating & Air Conditioning can help you choose the heating and cooling system that best suits your needs in Eagle and qualifies for tax incentives.

Rebates

The IRA also set aside money for rebate programs that the states will administer when these incentives become available, possibly in late 2024.

The Home Energy Performance-Based Whole-House Rebate program will rebate $2,000 to $4,000 for energy-efficient retrofits that reduce energy use between 20 to 35 percent or more.

The High-Efficiency Electric Home Rebate program will pay 100 percent of electrification project costs for low-income households and 50 percent for middle-income households. Rebates max out at $14,000 per household.

According to the Idaho Governor’s Office of Energy and Mineral Resources (OEMR), approximately $8.8 billion will reduce the cost of home energy and electrification projects nationwide.

Idaho will get its share of the federal rebate money, but OEMR is waiting for guidance and dollars.

State Incentive

Idaho offers a 40 percent tax deduction for solar, wind, geothermal, and some biomass equipment. You can claim 40 percent of the cost of your new equipment the year you install it and deduct 20 percent each of three more years. The maximum deduction in one year is $5,000.

Let our Western Heating & Air Conditioning experts help you maneuver the ins and outs of HVAC financial incentives, including local rebates.