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Federal Tax Credits for Energy Efficient Heating and Cooling

As part of the legislation designed to avoid the “fiscal cliff,” President Obama recently signed a bill that retroactively reinstates tax credits for energy efficient heating and air conditioning equipment. The previous bill relating to the program had expired on December 31st, 2011. The restoration of residential energy tax credits was extended from January 1, 2012, through December 31, 2013, for equipment that qualifies under the Internal Revenue Code: Section 25C. Since the tax credits are retroactive, consumers can apply them toward any heating or AC Installation that occurs during the qualifying period.

25C Federal Tax Credits

The requirements for federal incentives haven’t changed from the earlier program, but consumers will find it helpful to review the specific eligibility details.

Under the new law, homeowner’s can claim a credit up to 10 percent of the total cost of any qualified heating or AC installation, up to a $500 limit. The tax credit also applies to other energy efficient heating and air conditioning related improvements such as insulation, hot water heating units, windows and doors. While the total tax credit amount may not exceed $500, individual 25c tax credit claims are capped according to the following mandated limits:

  • Air Conditioners and Heat Pumps: ($300 tax credit limit)
  • Split System Air Conditioners must conform to the highest CEE tier as of January 1, 2009. Equipment must meet or exceed 16 SEER and 13 EER.
  • Packaged Unit Air Conditioners must conform to the highest CEE tier as of January 1, 2009. Equipment must meet or exceed 14 SEER and 12 EER.
  • Split System Heat Pumps must conform to the highest CEE tier as of January 1, 2009. Equipment must meet or exceed 8.0 HSPF, 15 SEER and 12.5 EER.
  • Packaged Heat Pumps must conform to the highest CEE tier as of January 1, 2009. Equipment must meet or exceed 8.0 HSPF, 14 SEER and 12.5 EER.
  • Furnaces: ($150 tax credit limit) – Any natural gas, oil or propane furnace rated at 95 AFUE or better qualifies for this credit.
  • Boilers: ($150 tax credit limit) – Any natural gas, oil or propane boiler rated at 95 AFUE or better qualifies for this credit.
  • Advanced Main Air Circulating Fans: ($50 tax credit limit) – Any fan component in a natural gas, oil or propane furnace that uses no more than two percent of the total energy consumed by the furnace qualifies for this credit.

Benefits of New HVAC Equipment

The benefits of replacing obsolete HVAC equipment with a modern energy efficient heating and air conditioning system are compelling, especially with the added incentive of tax credits. The professionals at All Temp Air Conditioning and Heating can help schedule an AC installation that is tax credit eligible and tailored to the unique characteristics of your home or office.



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