Do you like the idea of upgrading your HVAC system or buying one for your new home but worry about the cost? If you live in Texas, you may qualify for both tax incentives and rebates. With the tax incentives, you will either get a bigger refund or owe less when you file. Thanks to the rebate programs, you get some cash back when you spend money. Take a look at all of the programs you can use in 2023.
Inflation Reduction Act Rebates
You’re not alone if you notice rising prices at the grocery store. The United States recently experienced a high inflation rate, which is why the federal government created the Inflation Reduction Act. It handed out more than $4 billion to the states as long as those states used the funds to give homeowners rebates. Only low-income households qualify. You are a low-income household if you make 150% or less of the average income for your city or area. If you live with a partner or spouse, you need to compare your combined income to this rate.
The best thing about this rebate is that it gives you a percentage of what you spent back simply based on how much you make. Depending on your situation, you can get a rebate equal to either the maximum limit or 100% of the HVAC installation cost. Even if you make more than this amount, you might get up to 50% of the money you spent back as a rebate.
There is a different maximum amount for your rebate based on what you install:
- $8,000 for a heat pump
- $1,750 for a hot water heater
- $840 for certain appliances
- $4,000 for electrical upgrades
- $1,600 for adding more insulation or ventilation
Efficiency Tax Credits
Efficiency tax credits are also available for homeowners through the Inflation Reduction Act. These rebates help you afford upgrades that make your home more energy efficient. Adding a new boiler or biomass stove helps you qualify for the same credit.
Most of the funds go to those who install new Energy Star windows and doors and those who pay for energy audits. If you install a new electric heat pump to work with your HVAC system, the federal government gives you a $2,000 tax credit. While the overall program limits homeowners to just $1,200 in tax credits, heat pumps have a higher limit.
Using this credit is easy. You just need to pick a heat pump for your HVAC system with a SEER2 rating of 16 or higher. When you file your taxes, fill out Form 5695. The form asks how much you paid for the pump and its installation. You can deduct 30% of the total cost for a maximum of $2,000.
Deductions are different from tax credits. With deductions, the IRS allows you to apply this figure to the amount you owe. It will then charge you a tax rate based on the remaining income. With a tax credit like this one, you add the money to your tax refund.
Let’s say you filed your taxes and qualify for a $2,000 refund. When you add the tax credit, you can get back up to $4,000 instead. If you get a $1,000 refund without the credit, adding it lets you get up to $3,000 back.
On the other hand, this tax credit can reduce your IRS bill. If you didn’t pay enough in taxes in the last year, the IRS would ask for the difference between that figure and what you owe. As long as you owe less than the credit, you get a refund for the difference. However, you can also apply the credit to your entire tax bill from the past year. This lets you pay off your debt.
Rebates from Energy Providers
Other rebates available for Texas homeowners in 2023 come directly from energy providers. CPS Energy has branches in San Antonio and other major cities. It has a Residential Energy Efficiency Rebate Program open to those installing energy-efficient central air conditioners. You must be a residential customer to qualify and choose a central AC unit approved by the company. Ductless mini-split systems also qualify if they have a SEER rating of 20 or higher. CPS Energy also offers rebates for certain retail products of up to $130.
Some of the other rebates that CPS Energy offers give you money when you do other things, including:
- Assess or audit your home’s energy usage
- Add more insulation to your attic
- Tune up your HVAC system
- Buy and use a smart thermostat
If your energy comes from Oncor Energy, you can use its Energy Incentive Program. This program is open to customers who live in Lubbock, Odessa, Ft. Worth, and surrounding areas. The company has over $11 million in funds reserved for HVAC rebates. You must purchase an HVAC system from an approved contractor and use the same contractor to install it. Oncor Energy also has a Retail Products Program where you earn rebates when you buy energy-efficient products from certain stores. Get $50 back when you buy a room air conditioner and $65 off a smart thermostat.
Southwestern Electric Power Company and AES Texas offer similar customer rebate programs. The Electric Utility Marketing Managers of Texas (EUMMOT) provides help for those who want to see if they qualify for any rebates and how much money they can get. You can also check your electric bill or contact your supplier to see if it offers any HVAC rebates.
United Cooperative Services has a residential Energy Efficiency Rebate Program that is open to low-income customers. As long as you install an approved product in your home, you qualify for a rebate of up to $3,000.
The Xcel Energy Residential and Hard-to-Reach Standard Offer Utility Rebate Program in Texas offers rebates of up to $250,000 for commercial customers and a smaller amount for residential customers. You qualify when you install a new heat pump, central air conditioner, or window unit that improves the efficiency of a home or commercial building. The program also requires that you find a participating sponsor to install the equipment.
Some of the other companies and organizations that offer HVAC rebates include:
- Texas-New Mexico Power Company
- Magic Valley Electric Cooperative
- Entergy Texas
- Bryan Texas Utilities
How Long Does It Take?
The amount of time it takes to get your HVAC rebate depends on factors like the number of homeowners who applied at the same time and the size of your rebate. Many people wait until the last minute to apply. If you wait until the end of 2023, you may not get your check until the spring of next year.
Always read through the rebate guide to make sure you don’t miss a step. You usually need to supply the name of the contractor and/or installation company as well as the product you picked. Most programs also ask for a copy of your receipt. If you forget to include anything, you will likely get a letter that states the organization/company needs more information before it can issue your refund.
Choose the Right HVAC System
Choosing the right HVAC system helps you get the biggest rebate possible. We can help you pick a new AC, mini-split, heat pump, or smart thermostat. We also offer repairs and maintenance for heating and cooling systems. Give Air Authority, A Riteway Service Company a call today to find out more about how we can help you qualify for tax incentives and rebates for 2023.