If you’re a Bozeman homeowner, you may be aware of rising heating costs. According to a recent news report by Montana Right Now, it’s because “Montanans are projected to spend 13.6% more on their utility bills this winter.” Rising utility costs, public concern over energy efficiencies, and increasing environmental impact have prompted the government to incentivize home heating solutions through the Inflation Reduction Act. The Inflation Reduction Act is a federal law, which in addition to curbing inflation, also invests into domestic energy production and encourages clean energy.

At Mountain Heating & Cooling, we are home heating experts who know the Inflation Reduction Act is good news for you as a homeowner. It is the largest HVAC incentive program ever established, and it was created so homeowners could take advantage of federal tax credits and deductions to make their homes more energy efficient and reduce home energy costs. One way homeowners can do this is through heat pump rebates and tax credits. Heat pump rebates and tax credits are financial incentives offered by the government to offset the upfront cost of purchasing and installing a heat pump. The reason heat pumps are included in the act is because they are high-energy efficient heating and cooling systems.

The long-term savings associated with heat pump installations extend far beyond tax credits and rebates. Because heat pumps are highly energy efficient, they are considered one of the most cost-effective ways to heat and cool your home. They can typically save you between 30-40% on utility expenses when compared to a forced air system. Other heat pump benefits that offer long-term savings are that they can add value to your home. Heat pumps can save you an average of 30-70% on energy costs annually, and they are 2-3x more efficient than gas furnaces, which can add up to significant savings over the years.

When it comes to heat pump installation, the most important decision you’ll make is ensuring that you’re hiring the best-qualified HVAC contractor. Our HVAC professionals have extensive, ongoing training and certification so you can feel confident that your heating installation or repair goes smoothly. At Mountain Heating & Cooling, we take the time to understand your unique needs and will ensure that we help you select a home heating system that exceeds your expectations. Explore the benefits of upgrading your home’s comfort and efficiency with a heat pump.

How to Benefit From Heat Pump Rebates

Taking advantage of incentives such as heat pump rebates can help lower heating installation costs and make your home more energy efficient and cost-effective in the long run. The benefits of leveraging these rebates and tax credits when installing heat pumps include:

  • Financial Savings: Rebates and tax can significantly offset the initial cost of heat pump installation. Also, heat pumps save between 30-70% on annual energy costs,adding long-term value to your home.
  • Environmental Impact: Heat pumps are environmentally friendly; they do not produce carbon emissions because they do not burn fuel.
  • Energy Efficiency: Heat pumps are highly energy efficient and can save between 30-40% in annual energy costs compared to a forced air system.

What Heat Pump Rebates & Tax Credits are Available to Homeowners?

According to Energy Star, which is backed by the U.S. Environmental Protection Agency, from now through 2032, “federal income tax credits are available to homeowners that will allow up to $3,200 annually to lower the cost of energy-efficient home upgrades by up to 30%.” As a homeowner, you may also take advantage of this tax credit and the Residential Clean Energy credit to get a 30% income tax credit for installing clean energy equipment, such as a heat pump, into your home.

In addition to the tax credits, you may be eligible for heat pump rebates good for up to $1,750 for a heat pump water heater and $8,000 for heat pumps for space heating and cooling. All taxpayers qualify for the tax credit program, while eligibility for federal heat pump rebate programs depends on household income level. The median household income rebate eligibility is as follows:

  • Households making less than 80% of their state’s median household income are eligible for 100% of the rebates.
  • Households making between 80 and 150% of the median household income of their state are eligible for 50% of the rebates.
  • If your household income is equal to or greater than 150% of the state’s median, you’re not eligible for the rebates, but you still qualify for the tax credits.

Homeowners should also be aware that they can take advantage of “rebate stacking” when it comes to heat pumps. Rebate stacking is when you use multiple incentives to help lessen the upfront costs of your heat pump installation. For homeowners who qualify, using rebate stacking towards your home heat pump installation may make it nearly free. For example, a primary bedroom mini-split heat pump installation for a homeowner who earns less than $56,000 would be zero. As HVAC experts who know how to help homeowners get the most out of rebates, we know that heat rebates can change. That’s why we recommend you schedule a consultation with us and get pricing now.

How to Claim Heat Pump Rebates & Tax Credits

Also, according to Energy Star, federal tax credits for energy efficiency can be “claimed with your federal income taxes for the year in which you make your heating system upgrades.” However, before you prove your claims, there are a few things to consider:

  1. Claims must be made for improvements to the home you live in.
  2. You may not claim the tax credit if you do not live in the home because you are a landlord or property owner.
  3. The tax credit doesn’t apply to newly built homes.
  4. There are no lifetime dollar limits to the tax credits.
  5. You may claim the maximum annual credit for every year you make an improvement to your home through 2023.
  6. Tax credits are not refundable, and you can’t get back more than you owe in taxes.
  7. And finally, you cannot apply for excess credit for future tax years.

Instructions and Applications For Claiming Rebates & Tax Credits

  • Instructions for Form 5695
  • Claim using the IRS Form 5695
  • For 2024 in Montana, Montana homeowners should know that details regarding point-of-sale rebates and income verification have not been finalized at this time. Homeowners can contact energy resource professionals at the Montana Department of Quality with questions regarding residential energy efficiency rebates here or contact our heat pump installation experts to answer all your rebate claim questions.

Want to Learn More Heat Pump Rebates? Ask Your Montana HVAC Experts

Installing new heating systems may cost anywhere between $6,000 to $18,000. Don’t be overwhelmed by sticker shock—you have options! One of the best ways to mitigate these expenses is to leverage heat pump rebates and tax credits. Not only will you save on heat pump installation costs, but you’ll also reap the long-term savings that energy-efficient heating systems provide.

At Mountain Heating & Cooling, we can help answer your heat pump rebate and tax credit questions so you can benefit from these savings. Reach out and schedule an appointment for a heat pump consultation today!