If you’re a Bozeman homeowner, you may be aware of rising heating costs. According to a recent news report by Montana Right Now, it’s because “Montanans are projected to spend 13.6% more on their utility bills this winter.” Rising utility costs, public concern over energy efficiency, and increasing environmental impact have prompted the government to incentivize home heating solutions through the Inflation Reduction Act. The Inflation Reduction Act is a federal law that, in addition to curbing inflation, invests in domestic energy production and encourages clean energy.
At Mountain Heating and Cooling, we are home heating experts who know the Inflation Reduction Act is good news for you as a homeowner. It is the largest HVAC incentive program ever established, and it was created so homeowners could take advantage of federal tax credits and deductions to make their homes more energy efficient and reduce home energy costs.
One way homeowners can do this is through heat pump rebates and tax credits. Heat pump rebates and tax credits are financial incentives offered by the government to offset the upfront cost of purchasing and installing a heat pump. Heat pumps are included in the act because they are highly energy-efficient heating and cooling systems.
The long-term savings associated with heat pump installations extend far beyond tax credits and rebates. Because heat pumps are highly energy efficient, they are considered one of the most cost-effective ways to heat and cool your home. They can typically save you between 30% and 40% on utility expenses when compared to a forced-air system.
Other heat pump benefits that offer long-term savings include the potential to add value to your home. Heat pumps can save you an average of 30% to 70% on energy costs annually, and they are two to three times more efficient than gas furnaces, which can add up to significant savings over the years.
When it comes to heat pump installation, the most important decision you’ll make is ensuring that you hire the best-qualified HVAC contractor. Our HVAC professionals have extensive, ongoing training and certification, so you can feel confident that your heating installation or repair goes smoothly.
At Mountain Heating and Cooling, we take the time to understand your unique needs and will help you select a home heating system that exceeds your expectations. Explore the benefits of upgrading your home’s comfort and efficiency with a heat pump.
How to Benefit From Heat Pump Rebates
Taking advantage of incentives such as heat pump rebates can help lower heating installation costs and make your home more energy efficient and cost-effective in the long run. The benefits of leveraging these rebates and tax credits when installing heat pumps include:
- Financial Savings: Rebates and tax credits can significantly offset the initial cost of heat pump installation. Heat pumps can also save between 30% and 70% on annual energy costs, adding long-term value to your home.
- Environmental Impact: Heat pumps are environmentally friendly because they do not produce direct carbon emissions by burning fuel.
- Energy Efficiency: Heat pumps are highly energy efficient and can save between 30% and 40% in annual energy costs compared to a forced-air system.
What Heat Pump Rebates & Tax Credits Are Available to Homeowners?
According to ENERGY STAR, which is backed by the U.S. Environmental Protection Agency, from now through 2032, “federal income tax credits are available to homeowners that will allow up to $3,200 annually to lower the cost of energy-efficient home upgrades by up to 30%.”
As a homeowner, you may also take advantage of this tax credit and the Residential Clean Energy Credit to receive a 30% income tax credit for installing qualifying clean energy equipment, such as a heat pump, in your home.
In addition to tax credits, you may be eligible for heat pump rebates of up to $1,750 for a heat pump water heater and up to $8,000 for heat pumps used for space heating and cooling. All taxpayers may qualify for applicable tax credits, while eligibility for federal heat pump rebate programs depends on household income.
The median household income rebate eligibility is as follows:
- Households making less than 80% of their state’s median household income may be eligible for 100% of the rebates.
- Households making between 80% and 150% of their state’s median household income may be eligible for 50% of the rebates.
- Households with an income equal to or greater than 150% of the state’s median may not be eligible for the rebates, but they may still qualify for tax credits.
Homeowners should also be aware that they may be able to take advantage of “rebate stacking” when purchasing a heat pump. Rebate stacking involves using multiple incentives to help reduce the upfront cost of heat pump installation.
For homeowners who qualify, applying multiple rebates toward a heat pump installation may substantially reduce the total cost. For example, a primary bedroom mini-split heat pump installation for a homeowner who earns less than $56,000 could potentially have no out-of-pocket cost.
As HVAC experts who know how to help homeowners get the most out of rebates, we also know that heat pump incentives can change. That’s why we recommend that you schedule a consultation with us and request current pricing.
How to Claim Heat Pump Rebates & Tax Credits
According to ENERGY STAR, federal tax credits for energy efficiency can be “claimed with your federal income taxes for the year in which you make your heating system upgrades.” However, before filing your claim, there are a few things to consider:
- Claims must be made for improvements to the home you live in.
- You may not claim the tax credit if you do not live in the home because you are a landlord or property owner.
- The tax credit does not apply to newly built homes.
- There are no lifetime dollar limits on the tax credits.
- You may claim the maximum annual credit for every year you make qualifying improvements to your home.
- Tax credits are nonrefundable, and you cannot receive more than you owe in taxes.
- You cannot apply excess credit to future tax years.
Instructions and Applications for Claiming Rebates & Tax Credits
- Instructions for Form 5695
- Claim qualifying credits using IRS Form 5695.
- Montana homeowners should know that details regarding point-of-sale rebates and income verification may not yet be finalized. Homeowners can contact energy resource professionals at the Montana Department of Environmental Quality with questions about residential energy-efficiency rebates here, or contact our heat pump installation experts with rebate and tax credit questions.
Want to Learn More About Heat Pump Rebates? Ask Your Montana HVAC Experts
Installing a new heating system may cost anywhere from $6,000 to $18,000. Don’t be overwhelmed by sticker shock—you have options! One of the best ways to mitigate these expenses is to leverage heat pump rebates and tax credits. Not only can you save on heat pump installation costs, but you can also benefit from the long-term savings provided by an energy-efficient heating system.
At Mountain Heating and Cooling, we can help answer your heat pump rebate and tax credit questions so you can benefit from these savings. Reach out and schedule an appointment for a heat pump consultation today!
