What Qualifies for the Energy Tax Credits in 2023?

March 23, 2023

The only thing more attractive than saving energy in your home is saving money on the cost of energy efficiency upgrades that will further increase those energy savings for years to come. If you have heard that there are 2023 energy tax credits available and you want to cash in, Hassler is here to help! Here's what you need to know about what appliances qualify for energy tax credits, and how you can take advantage here in the East Bay area. For central ducted heat pump systems, installed equipment needs to have an Energy Star rating of at least (15.2 SEER 2, 11.7 EER2, and 7.8 HSPF 2)

For non-ducted (Mini-Split) heat pump systems, installed equipment needs to have an Energy Star rating of at least (16 SEER 2, 12 EER2, and 9 HSPF 2. The heat pump experts at Hassler Heating and Air Conditioning can help you pick equipment that qualifies to get the new 2023 Federal Tax credit.

With the relaunch of the Tech Clean California Heat Pump HVAC rebate program in the spring, there will be an additional $1,000 rebate for installing qualifying heat pump HVAC equipment.

For homes that have an existing AC condenser and a new ducted heat pump system will be installed, there is a $1,150 rebate from BayRen Home Upgrade that can be layered on top of the $1,000 Tech Clean California rebate.

For homes that have existing wall or floor heaters and a new non ducted Mini-Split system will be installed, There is a $1,150 rebate from BayRen Home Upgrade that can be layered on top of the $1,000 Tech Clean California rebate.

If you happen to live in Marin county, the city of Albany, the city of Alameda, or the city of Piedmont, and you are installing a heat pump hvac system or heat pump water heater, there are additional rebates ranging from $500-$1,500 that can be layered on top of the above rebate programs and Federal tax credits.

How to Save with Tax Credits

Tax credits have become the go-to way for both Federal and State agencies to incentivize homeowners to invest in all-electric, energy-efficient equipment like heat pumps, water heaters, and renewable energy systems like solar. Tax credits do not necessarily reduce the upfront costs of installation, but they do allow you to reduce your taxes due for the year in which you made the upgrade, meaning you’ll owe the government less when it comes time to do your taxes.

What Energy-Efficient Appliances Qualify for Tax Credits

The Inflation Reduction Act - passed last year - has improved upon existing tax credits and also created other new savings programs for taxpayers. They include: the Investment Tax Credit for solar panel installation and battery storage, the Energy Efficient Home Improvement Tax Credit, and the Homeowner Managed Energy Savings rebate program, which will not be available until at least 2024 (details to be determined at a later date).

The Energy Efficient Home Improvement Tax Credit is a revamped version of the old Nonbusiness Energy Property Credit that expired at the end of 2021. It now offers a 30% tax credit for qualifying residential energy efficiency upgrades, which can be applied to the following:

Heat pumps
Heat pump water heaters
Electrical panel upgrades
Insulation and air sealing
Energy-efficient HVAC equipment
Energy assessments
Energy-efficient exterior windows
Energy-efficient exterior doors

Each of these upgrades qualifies for a 30% deduction and has its own maximum benefit per year, and will be available until 2032. Talk to our team to learn exactly how much you could qualify for.

Example of Tax Credit Savings

If you were to spend $1,500 on heat pump installation for your home in Contra Costa, Alameda, or Marin county in the month of July, 2023, you can deduct $450 from what you owe in federal taxes come April. The more energy-efficient upgrades you make in a year, the less you will pay in taxes!

Comprehensive Energy-Saving Solutions for Your Home Comfort

Upgrading your home to all-electric home comfort is a step in the right direction for your energy costs, the comfort of your family, and the environment. The experts here at Hassler can help you to determine which equipment will have the greatest impact on your energy reduction, which home performance upgrades will further improve the efficiency of your new equipment, and how you can maximize your tax savings. We offer comprehensive whole-home solutions, or you can develop a long-term plan to tackle your home upgrade one piece at a time. The best place to start is with an energy assessment - schedule yours today!