Federal HVAC Rebates Now Available!

New Rebates Make Upgrading Your HVAC System More Affordable

Federally funded heating and cooling rebates have arrived, which is good news for anyone planning home improvements this year.

As of September 2024, a few states have launched rebate programs that will lower the cost of energy-efficient upgrades such as air sealing, insulation, heat pump installation, and electric appliances.

A handful of other states are poised to begin awarding federal rebate dollars this fall, and even more plan to make rebates available to residents in 2025.

At Clear Air Conditioning & Heating Inc., we are closely following the progress of the Home Energy Rebates program in Arizona. We can help with efficiency upgrades, like heat pump installation, in your Peoria home to improve comfort and reduce energy consumption.

Call us for a consultation at 623-516-8373 or request service online. Your project may qualify for a tax credit now.

Rebates vs. Tax Credits

Rebates give you a partial refund of the purchase price. They typically occur after you buy a product or service. In the case of Home Energy Rebates, the money provided lowers the cost at the point of sale.  

Tax credits reduce what you owe the federal or state government in income tax. You can get a 30 percent tax credit for eligible energy-efficient home improvement projects through 2032. Here is a sampling of maximum credits:

• Air conditioners up to $600
• Heat pumps up to $2,000
• Oil and natural gas furnaces up to $600
• Insulation up to $1,200
• Energy audit up to $150

Learn more about the improvements that qualify for federal tax credits at ENERGY STAR^®.

Inflation Reduction Act (IRA)

The IRA, which became law in 2022, updated and extended energy-efficiency tax credits through 2032. It also created the Home Energy Rebates program, setting aside nearly $9 billion to help U.S. residents pay for home improvements that will lower their energy consumption and save money on their utility bills.

The federal government gave the states the authority to administer the rebate program. States are tasked with developing rebate programs for their residents, applying for federal funding, and distributing their share of the funds as rebates for energy-efficient home improvements. The states are at various steps in the process.

From Application to Launch

As of September 1, Wisconsin, New York, Arizona, and New Mexico have launched rebate programs. A dozen others received U.S. Department of Energy (DOE) application approval and are tweaking their programs before launching.

Other states have submitted applications and await approval. Approximately two dozen states are preparing applications and have until the end of January 2025 to submit them to the DOE. One state, South Dakota, has opted out of the program.

Check out this DOE map to see where each state is in the rebate process.

Two Rebates Programs

The Home Energy Rebates program consists of two distinct rebate programs: Home Efficiency Rebates (HOMES) and Home Electrification and Appliance Rebates (HEAR). States can apply for federal funding to offer one or both programs to their residents.

The two programs may look a little different from state to state. Although the federal government sets guidelines for each program, state energy offices may put their stamp on them.

For example, the federal government specifies the type of electric appliances and services, such as air sealing and home wiring, that qualify for rebates under the HEAR program. Each state can decide if it will offer all or just some items listed in the guidelines.

States also can determine which method to use when determining the basis for the HOMES rebates. They can use a modeled approach, which estimates how much energy the home improvements will save, or the measured approach, which tracks savings over several months after installation. States can adopt just one or both methods.

You can seek a tax credit and a rebate for the same qualified home improvement or electrification project. However, you cannot earn rebates from both HOMES and HEAR for the same project.

Here is a closer look at the HOMES and HEAR rebate program:

HOMES Rebate Program

This program is open to all income levels. It allows you to make energy-saving home improvements in heating and cooling, water heating, and your home’s envelope and receive a rebate based on the amount of energy the improvements save.

Under the modeled method, improvements estimated to save 20 to 35 percent are eligible for a $2,000 rebate, and those estimated to save over 35 percent are eligible for a $4,000 rebate.

The measured method considers actual energy savings achieved over the months after you complete your home improvement project. It must save at least 15 percent on energy consumption. The more you save, the bigger the rebate.

Both methods cap rebates at 50 percent of the project cost.

HEAR Program

This program applies to homeowners and renters and assists low-to-moderate-income households with rebates. It defines low income as earning less than 80 percent of the area median income and moderate as 80 to 150 percent of the area median income.

The rebates cover 100 percent of electrification costs up to $14,000 for low-income households and 50 percent up to $14,000 for those with moderate incomes.

What constitutes an electrification project? Here is a list, along with the maximum rebate:

• Heat pump for space heating, $8,000
• Electric panel, $4,000
• Electric wiring upgraded, $2,500
• Heat pump water heater, $1,750
• Insulation, air sealing, and ventilation, $1,600
• Electric stove, cooktop, or oven, $840
• Electric clothes dryer, $840

Each state will decide what items to include in its localized HEAR program.

Cut Energy Waste, Save Money

Thinking about upgrading your HVAC system? New federal rebates can help you save money! Let Clear Air Conditioning & Heating Inc. recommend energy-efficient upgrades for your Peoria, AZ, home. We can help you cut energy consumption, save money, and enhance your comfort with top-notch HVAC equipment that qualifies for discounts and tax credits. Call us today at 623-516-8373 or request service online for a free consultation on how you might qualify for these savings.