How To Save Money When Purchasing A Heat Pump To Cool & Heat Your Home

Background
Heat pumps for air conditioning (AC) and heating cool the house during the summer by removing unwanted heat from indoors. This process is very similar to the standard AC, but unlike the typical AC unit, heat pumps can also provide heating to your home during the winter. This is done by taking heat from outside, even when it’s cold, and pumping it indoors. This differs from heaters, which often generate heat by burning fossil fuels, such as gas. Heat pumps are typically easy to install and more efficient than typical AC and heater systems. According to the U.S. Department of Energy, these systems can reduce energy consumption by about 50%, helping to save money and energy. In addition, as part of the federal Inflation Reduction Act, you may be able to use a tax credit to purchase a heat pump to cool and heat your home (see below).

Federal Tax Credit and Requirements
1. Air Source Heat Pumps Tax Credit
a. The tax credit is in effect from January 1, 2023 – December 31, 2032. Each year that you make eligible improvements, you can claim the maximum annual credit.
b. The Air Source Heat Pumps Tax Credit is part of the Energy Efficient Home Improvement Tax Credit. The Energy Efficient Home Improvement Tax Credit may enable you to qualify for a tax credit up to $3,200. Of that amount, up to 30%, with a maximum of $2,000 (including labor for installation), may be claimed for any combination of electric or gas heat pumps, electric or gas heat pump water heaters, and biomass stoves and boilers. See our webpage for additional opportunities to save money and save energy with tax credits: www.savingenergytips.org
c. Heat pumps that have earned the Energy Star certification can be used for the tax credit, provided the eligible equipment is new and meets or exceeds the highest efficiency tier excluding the advanced tier rating.
d. To claim your tax credit, you will need to file Form 5695.

2. IRS Requirements
a. The heat pump must be installed in the home that is your principal residence. The principal residence, which must be in the U.S., can be a house, mobile home, manufactured home, cooperative apartment, condominium, or a houseboat.
b. New construction and residences you rent out as a landlord are not eligible for this tax credit.

Arizona Related Benefits
Arizona Public Service, Salt River Project, and Tucson Electric Power have heat pump programs to help their customers save money. The offerings, which differ for each utility, range from rebates when you buy and install an Energy Star certified heat pump to comparing units for purchase. See the website of your utility for details including eligibility requirements.

If you or someone you know need help paying for utility bills or appliances — including air conditioning, you can contact Wildfire, a non-profit organization with partnerships across the state of Arizona. The Arizona Department of Economic Security (ADES), through the Low Income Energy Assistance Program (LIHEAP), offers additional help with utility bills for qualified households.

*Please note the above information taken from federal government and Arizona utility websites is subject to change. We recommend checking the relevant website(s) for updates. We also recommend checking out our webpage for additional opportunities to save money and save energy: www.savingenergytips.org

For more information: [email protected] or (602)252-9227.