You have a great opportunity to save money on your utility bills if you need to replace your air conditioner or gas furnace.
You can get up to $8,000 in federal credit if you replace your heating-cooling units by a heat pump. The credit is indexed to your income but it’s still a great deal for something that heats and cools your entire home.
Robert Gebelhoff, The Washington Post, writes that “heating and cooling systems were once only useful in warmer climates” They are the best way to eliminate fossil fuels for heating.
Gebelhoff points out that heat pumps can produce 2.5 to 5.5 units heat for every unit of electricity they use. This is according to the International Renewable Energy Agency. Heat pumps are efficient at generating heat between 250 and 550 percent. Fossil-fuel boilers are, however, only 95 percent efficient. Heat pumps are at best 95 percent efficient. This is why they are often more cost-effective than fossil fuel boilers, particularly when replacing older systems. Cost estimates can vary depending upon the size and age a house. They can range from $3,000 to as high as $20,000.
The problem with the tax credit is its complexity. HVAC.com explains how they work.
- You’ll get up to 50% off the cost of the heat pump if your household income is between 81-150% and your local median income.
You will receive the maximum rebate if your household income falls below 80% of your area’s median. This rebate covers your heat pump up to 100% and $8,000. Use this tool to find out the area’s median household income.
- If your household income is higher than 150% of the area’s median income, you’re still eligible for a tax credit. This homeowner receives a 30% tax credit up to $2,000 for new heat pumps.
- Low-income homeowners are eligible for heat pump rebates. HomeAdvisor estimates that heat pumps average $5,792. Low-income households are most likely to get a heat pump at no cost.
The good news? Middle-income households can save on average $2,896 by purchasing a new heatpump. The average tax credit for households above middle income will be $1,737.60 Significant savings will be available to retirees who have to replace their heating and cooling units.