The 2023 Heat Pump Tax Credit is a federal tax credit aimed at encouraging homeowners to invest in energy-efficient heat pumps. The credit was enacted as part of the American Rescue Plan Act of 2021 and will be available for taxpayers who install eligible heat pumps in their homes between January 1, 2022, and December 31, 2023. The credit is equal to 10% of the cost of the heat pump installation, up to a maximum of $500.
Heat pumps are an attractive option for homeowners looking to reduce their energy costs by taking advantage of renewable sources like geothermal or solar power. Heat pumps are more efficient than traditional heating systems because they move instead of generate heat, using less energy in the process. This means that over time they can save you money on your monthly utility bills while also reducing your carbon footprint by using less electricity or gas to produce heating and cooling in your home.
In order to qualify for this tax credit, you must purchase and install a qualifying high-efficiency heat pump system before December 31st 2023 with an AFUE (Annual Fuel Utilization Efficiency) rating that meets or exceeds 16 SEER (Seasonal Energy Efficiency Ratio) and 13 EER (Energy Efficiency Ratio). Your contractor should be able to confirm whether or not your system meets these requirements when installing it. Additionally, if you have already installed an eligible system within the last few years but have not claimed the tax credit yet, you may still be able to do so under this new legislation if it meets the minimum requirements listed above.
While this tax credit could certainly help offset some of the cost associated with purchasing and installing a new heat pump system for many homeowners across America, it is important that consumers understand all their options when considering different heating solutions as there are other incentives available depending on where they live such as state-level rebates or even utility company programs that could also make investing in an energy-efficient heat pump more affordable overall. It’s always best practice to do research into all available options before making any big decisions regarding investments into home improvement projects like these so that you can make sure you’re getting the most bang for your buck!