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Federal Tax Credits for Louisville HVAC Systems & Water Heaters

Owning a home in Louisville comes with the responsibility of maintaining its comfort and functionality. While HVAC and plumbing upgrades can be costly, it's important to know that there are tax credits and rebates available to help offset these expenses.

In this blog post, we give an overview of the various HVAC and plumbing tax incentives offered to Louisville area homeowners through the Inflation Reduction Act of 2022 and other programs, and discuss how to claim these credits on your income taxes.

Available Tax Credits for Louisville Homeowners

Homeowners looking to reduce their energy consumption and save on utility bills may want to consider making energy-efficient home upgrades. In addition to offering financial benefits, energy-efficient improvements can also have a positive impact on the environment.

To further encourage homeowners to take steps towards energy efficiency, the U.S. government offers federal tax credits for qualifying home improvements. Many of these tax credits are available through the Inflation Reduction Act of 2022 are designed to incentivize homeowners to invest in energy-saving upgrades that will ultimately reduce their carbon footprint.

Heating & Cooling Tax Credits

When it comes to HVAC system improvements, the Inflation Reduction Act of 2022 provides tax credits for installing high efficiency HVAC equipment such as air conditioners, furnaces, and air source heat pumps. These credits can help offset the costs of upgrading to more energy-efficient systems. However, it's important to note that the HVAC tax credit only applies to models that meet EPA and ENERGY STAR standards for the new equipment's energy efficiency rating.

  • Installing a new energy-efficient central air conditioner can qualify homeowners for a tax credit of 30% of the project costs, up to $600. 

  • Installing qualified electric heat pumps can result in a tax credit of 30% of the heat pump installation cost, up to $2,000. 

  • The installation of a new natural gas furnace, oil furnace, or boiler may also qualify for a 30% tax credit, up to $600.

Water Heater Tax Credits

In terms of plumbing, energy tax credits are available for installing gas tank water heaters, gas tankless water heaters, and heat pump water heaters. 

Homeowners can receive a tax credit equal to 30% of the installation cost, up to $600, for installing energy-efficient gas water heaters.

If you wish to install a heat pump water heater, you have access to a larger tax credit. You may qualify to receive a credit of 30% of the installation cost, up to $2,000.

Geothermal Heat Pump Tax Credits

If you're interested in geothermal heat pumps, not only will your energy savings greatly increase, but you can save substantially on installation using the available tax credit. Installing geothermal heat pumps can qualify you for a tax credit of 30% of the total cost.

How Do I Qualify For and Claim These Tax Credits?

To qualify for these federal income tax credits, ensure that your new system meets the required energy efficiency standards and is installed by a licensed contractor. Keep all necessary paperwork, receipts, and invoices from your contractor related to the installation to successfully claim the credits on your income tax return.

It's important to be aware of the annual limits on energy-efficient home improvement tax credits. There are overall aggregate limits and individual limits for specific upgrades. The current overall total limit for an efficiency tax credit in one year is $3,200. Additionally, there are separate limits for home envelope improvements and combinations of furnaces, boilers, and central air conditioners, as well as for heat pumps, heat pump water heaters, and biomass stoves/boilers. The combined annual credit limit for these upgrades is $1,200.

Available Louisville, KY HVAC & Plumbing Energy Rebate Options

In addition to tax credits you can claim on your federal income taxes, there are other HVAC and plumbing energy rebate options offered on a local level for Louisville homeowners that can significantly reduce your energy expenses. These rebates come in the form of incentives and rewards for switching to energy-efficient heating and cooling equipment or upgrading your home's plumbing systems.

With these options, you'll not only be helping the environment by reducing your carbon footprint, but you'll also be saving money on your energy bills. So, if you're interested in taking advantage of these opportunities, below you’ll find more information on the local utility rebates available to Louisville homeowners.

Additional Energy Tax Incentives You May Qualify For

Investing in new HVAC equipment and water heaters isn’t the only way to increase your tax savings! Here are some additional energy tax incentives that you may be eligible for:

Electrical Panel Upgrades

Upgrading your electrical panel to an energy-efficient system can earn you a tax incentive of up to 30% of the equipment and installation costs, up to $600.


Installing new insulation in your home can allow you to claim a tax credit equal to 30% of the project cost, up to $1,200. This not only helps keep your home comfortable but also reduces energy waste.

Solar Energy

By installing solar panels, you can generate clean and renewable energy to use at home, greatly reducing your use of grid power and your electricity bills. The tax credit for solar installation is 30%, and this is for systems placed in service between December 31, 2021, and January 1, 2033.

Windows & Door Upgrades

Replacing old and inefficient windows and doors can significantly reduce your energy bills, helping you keep more of your heating and cooling energy indoors. You can claim a tax incentive of up to 30% of the purchase cost of eligible windows, up to $600. Similarly, installing new exterior doors can come with a tax credit equal to 30% of your project costs, up to $250 per door. There is an annual maximum of $500.

Home Energy Audit

A professional home energy audit helps identify areas of energy waste around the house and tell you where you can make energy-saving improvements. By conducting a home energy audit, you can receive a detailed report on upgrades you can make to reduce energy consumption. You may also qualify for a tax incentive of 30% of your total costs, up to $150, for having a professional energy audit.

Save on Home Upgrades with HVAC Tax Credits

By taking advantage of these HVAC and plumbing tax incentives and creating a residential energy efficient property, homeowners can not only improve the comfort and efficiency of their homes but also save money on installation costs. Be sure to consult with a tax professional for personalized advice and guidance in claiming these credits.

If you're ready to upgrade your HVAC system or water heater to high efficiency equipment, Jarboe's can help! Contact us today to learn more about installing a qualified heat pump, new gas furnaces, an efficient cooling system, geothermal heat pumps, and water heaters.

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