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Ultimate Guide to HVAC Rebates & Tax Incentives in Texas

January 09, 2023

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Want to upgrade your HVAC system and take advantage of rebates and incentives to minimize the cost? Texas and the federal government have several programs that can help make switching to a more energy-efficient heating and cooling system affordable. They promote homeowners using more energy-efficient appliances with a focus on HVAC systems.

Local energy companies also often have rebates available to help lower initial installation costs, while several federal tax credits can help make upgrading more affordable.

Rebates and incentives combine to create affordable HVAC installation and other home improvement projects for San Marcos households earning less than $300,000 per year.

This blog offers an ultimate guide to HVAC rebates and incentives in Texas, giving you a roadmap to maximize your savings. The two main categories when it comes to savings on upgrading your HVAC are:

  • Tax Incentives
  • Rebates

Are you tired of overpaying for heating and cooling?

Call Reliable Air today at (512) 396-8183 for quality service Texans can trust. Our upfront pricing and highly-trained professionals handle heat pump installations quickly and with keen attention to detail.


Contact Your Local Utility Provider

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Call your local utility provider to see what rebate offers they have.

Before starting your HVAC upgrade, your first call should be to your utility company. Local providers throughout Texas have rebate offers and loan programs to help make installing energy-efficient HVAC units more attractive.

For example, CPS Energy has a Residential Energy Efficiency Rebate Program that offers between $90 to $310 per ton back on high-efficiency central air conditioner installations.

Programs may also provide rebates for insulation services and heat pump installation. Installing a heat pump may allow you to deliver up to three times more cooling and heating power to your home for the same energy usage, according to the Department of Energy. The average installation cost is around $9,500 for a new heat pump system, but rebates and tax credits can bring that number down.

When you can save on the installation and the monthly cost of cooling your home with a heat pump, it's a big win. Take a look at Texas Energy Efficiency to learn more about your utilities and other programs that may help cut costs.

Federal Tax Credits for HVAC Equipment

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The 25C tax credit can help you save money on an energy-efficient AC installation.

The Inflation Reduction Act (IRA) includes several options for tax credits called the 25C Non-Business Tax Credit related to installing energy-efficient air conditioning in your home. Texas homeowners can use the tax credits for:

  • Energy Efficient Home Improvement: This credit allows homeowners to deduct 30% of the cost of many home improvements that increase energy efficiency. Examples include installing heat pumps, improving insulation, and switching to smart thermostats.
  • Residential Clean Energy: This credit is another 30% tax deduction option for those interested in switching to solar energy or adding battery storage to reduce the demands on local power grids.

How Tax Credits Differ From Rebates

In addition to tax credits, which directly lower your tax liability, the IRA also includes several rebate programs called the High-Efficiency Electric Homes Rebate Act (HEEHRA) and Homeowner Managing Energy Savings (HOMES).

HEEHRA offers up to $8,000 in rebates for heat pump installations and up to $14,000 as their maximum consumer rebate. HOMES offers up to $8,000 for installing energy-efficient projects.

These rebates may allow you to collect a refund, even if you don't typically qualify. A rebate is applied to your tax return regardless of your tax liability. If the rebate amounts reduce the taxes you owe to negative amounts, you will receive a refund for that amount. But a tax credit never reduces your tax liability below $0 due.

Common HVAC Rebates

AC technician installing a heat pump

Texas homeowners can use either the HOMES or HEEHRA rebate program for their heat pump installation.

Texas passed legislation that requires electricity providers to meet specific energy efficiency guidelines. As a result, utility companies have developed a series of standard offer programs that offer utility rebates directly to consumers.

High-Efficiency ENERGY STAR Equipment

Switching to highly rated Energy Star appliances can make you eligible for various savings through your local utility. There may be restrictions or minimum standards you must meet to qualify for the rebates. Be sure to talk to your utility provider before making any final decisions.

Electric Heat Pump Conversions

Switching your HVAC to an electric heat pump may allow you to take advantage of both tax credit programs and rebates. For example, the Home Energy Performance Program offers up to $8,000 for new heat pump installations.

HOMES and HEEHRA rebate programs both apply for heat pumps, although you will have to pick one to use as you can't stack them for the same upgrade.

Natural Gas Furnace Installations

While electric heat pumps are more efficient than any other heating and cooling option, natural gas furnaces come a close second when providing heat. The running costs for these units are similar to what you'd expect to pay when using a heat pump. As a result, installing a new gas furnace may also make you eligible for various rebates.

Finding a Trustworthy HVAC Contractor To Help You

After you contact your utility company, your next step should be finding the right contractor to handle your HVAC upgrade.

Knowledgeable companies maintain lists of available rebates, tax credits, and eligibility requirements. If you're interested in maximizing your savings and minimizing the cost to improve your heating and cooling, work with a company that delivers fast, reliable service and guarantees their work.

Quality companies also have financing options for qualified customers to help reduce out-of-pocket costs for heating and cooling updates.


Get Top-Notch Service and Help With Rebate Applications!

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Contact Reliable Air for our knowledge of HVAC rebates and tax incentives in Texas.

Our more than two decades of experience serving San Marcos homeowners at Reliable Air translates into exceptional service and extensive knowledge of local programs and rebates. Households trust us to provide them with 5-star service and high-efficiency heat pump, air conditioner, and natural gas furnace installations.

Plus, we also provide convenient financing options.

Call us at (512) 396-8183 to schedule in convenient, 2-hour windows!