This could be the year to upgrade your HVAC system. From tax credits to rebates, California homeowners have several incentives to make the change to better energy efficiency. Replacing your current HVAC system with a high-efficiency one is a promising way to increase household savings.

Here is a breakdown of the HVAC rebates and incentives in 2024.

Energy Efficiency, Tax Credits, and Rebates

Heating and cooling your home can be expensive, especially if you have an older HVAC system. By using a less energy-efficient heater and air conditioner, you spend more each month on energy bills because these systems lose efficiency as they age. Upgrading to a new, high-efficiency system will save you money each month and qualify you for tax credits and rebates that provide additional savings.

Beyond saving money, replacing an older HVAC system with a new one allows you to contribute to a better environment. By not consuming as much energy, you lower carbon emissions and allow your household to help create a more sustainable future. Both state and federal offers provide incentives to make this shift to a cleaner environment and more savings.

In 2022, the Inflation Reduction Act provided incentives for homeowners to upgrade to more energy-efficient HVAC systems. For example, ENERGY STAR furnaces that have an Annual Fuel Utilization Efficiency (AFUE) above 90% qualify for tax credits and rebates. Air conditioners with a Seasonal Energy Efficiency Rating (SEER) of at least 16 are also included in the federal-to-state efforts to encourage consumers to adopt cleaner heating and cooling systems.

The federal and state tax credits and rebates below are based on upgrading to energy-efficient HVAC systems, such as mini-split ACs and heat pumps. Mini-split systems and heat pumps are estimated to be up to 30% more energy efficient than standard HVAC systems. Switching to these and other cleaner energy heating and cooling methods could make sense for you this year.

Federal Tax Credits and Heat Pumps

As part of the 2022 Inflation Reduction Act, the federal government offers savings in the form of two tax credits for California homeowners in 2024. The first one concerns solar power for your home, and the second addresses HVAC energy improvements.

By installing a home solar system, you can receive 30% of your federal tax bill this year. Home solar systems include Solar PV (photovoltaic) technology that generates electricity from roof panels, which can be used to power HVAC systems. Solar PV is part of California’s electrification plan for the future, aimed at reducing carbon emissions and turning homeowners toward cleaner energy sources.

The federal government also offers the energy efficiency home improvement tax credit. This incentive allows homeowners to claim a 30% tax credit on qualifying home energy efficiency improvements. This tax credit is directed at HVAC systems, such as installing central or ducted heat pumps and ductless mini splits.

Heat pumps run on electricity to draw heat from the outside air or ground to heat and cool your home. They then circulate the air in your home or transfer it outdoors. Ducted or central heat pumps are connected to air ducts in your home to circulate heat and air conditioning. They absorb heat from the inside and release it outside or transfer heat from the outside to the inside. Since they do not burn fuel, they are more energy efficient than furnaces. Thus, upgrading to the latest energy-efficient heat pump can save you money on energy bills and qualify you for a tax credit.

Ductless heat pumps or mini splits also provide savings to California homeowners. These heat pumps transfer heat and cold, instead of generating it like furnaces do. However, ductless heat pumps are usually mounted on the wall and do not connect to ducts in your home. California is encouraging homeowners to consider installing mini-split ACs and heat pumps to replace older HVAC systems or to help with areas of the home that are difficult to heat or cool.

By installing a high-efficiency ducted or ductless heat pump, you can qualify for a federal tax credit of up to $2,000. Heat pumps, along with solar power, allow you to reduce the use of fossil fuels, make your home more energy efficient, and provide energy and tax savings.

State Rebates and Heat Pumps

Installing a heat pump can also earn you a rebate in 2024. Under the TECH Clean California Rebate initiative, the state is encouraging homeowners to install heat pump HVAC systems.

This state rebate plan provides a $1,000 rebate for each heat pump unit (up to two total) that is installed in your home. The potential $2,000 rebate off of installation costs is meant to incentivize California homeowners to adopt cleaner technology for heating and cooling and help the state move toward being carbon neutral by 2045.

The TECH Clean California rebates are offered to single-family households to replace gas appliances. The heat pumps also need to be installed by a certified TECH Clean California contractor. This incentive promotes how heat pumps work well with California’s dry climate and provide a carbon-free heating and cooling solution. TECH Clean also provides rebates for heat pump water heaters.

You can look for rebate programs through your utility provider, too. About 20 utility companies in California are offering residential rebates to customers who install a heat pump. You can save up to $3,000 through this incentive program in 2024. To determine what is available in your area, check the website called, “The Switch Is On.” The site is connected with the California Public Utilities Commission.

Through utilities, you can further find rebates on smart thermostats. For example, Southern California Edison offers homeowners a $75 rebate for installing a smart thermostat. These devices allow you to control your heating and cooling through your phone or tablet and make automatic adjustments so that your HVAC system is not on for too long. This rebate program provides an additional incentive to reduce energy consumption.

State rebates that focus on newer technologies, like heat pumps and smart thermostats, provide excellent opportunities for long-term savings. This year could be the right time to upgrade your system.

Upgrading Your HVAC System

If your HVAC system is 10 to 15 years old, that is usually an indicator that it may be time to upgrade your system. Likewise, if you have arranged for several repairs to your heating and cooling system recently, that is another sign that it could be time to upgrade. In addition, if you find your AC is not cooling your home effectively or your heater is leaving rooms cold, then installing a new HVAC could be the right move.

Replacing an older air conditioner or heater with a new high-efficiency model can lead to savings of 40% to 60% on electricity bills. In many homes, 10% to 20% of air and heat are lost in older systems because of holes, leaks, and issues with the duct system. This energy loss equates with higher monthly bills and releases more carbon into the environment. These issues help indicate when it’s time to consider upgrading to an energy-efficient HVAC system.

In addition to the tax credits and rebates above, California also offers instant rebate coupons for air conditioners and smart thermostats, while the Comfortably CA program offers incentives to manufacturers and retailers to provide high-efficiency HVAC equipment. From consumers to providers, California is pressing ahead with HVAC energy efficiency and savings.

Top-Quality HVAC Services

Contact us at Comfort Bros Heating, Air & Plumbing for more information about installing a new HVAC system in your home. We provide top-quality air conditioning, heating, and indoor air quality services to El Cajon, CA, and the surrounding areas. We are a family-owned residential and commercial HVAC company with trained technicians who provide the best customer service. Call us today!

Meet the Author
Travis Smith
Travis Smith

Travis Smith started in his family's Heating and Air Conditioning business at 6 months and 5 days old "helping daddy do trim outs". He then worked at Sky Heating & AC for over 22 years before partnering with the Comfort Bros.
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