Rebates for Central Heating and Cooling Systems
Updated Oct 26, 2016
By Gary Sprague
Hundreds of governmental and commercial entities around the United States and Canada offer loans, rebates and tax credits to encourage homeowners to install renewable or high-efficiency heating and cooling equipment, such as:
- biomass stoves
- central air conditioners
- heat pumps
- smart / programmable thermostats
- water heaters
While the size and availability of these incentives has declined over the past few years, real savings are still available if you are willing to do some legwork. For example, if you replace an older inefficient central air conditioner with a system over 15 SEER you may qualify for a rebate of $600 to $1000. Boilers can qualify for a rebate varying from $350 to $1000; while furnace rebates typically range from $200 - $300. Heat pump rebates vary widely, depending on the specifics, but the biggest rebates are on geothermal units. Heat pump rebates can be anywhere from $150 - $1600. Many HVAC rebates are offered on Energy Star certified models.
If you're starting from scratch, we recommend the following process:
- Read this article for an overview of the incentives available
- Research the offers available in your area from the Database of State Incentives For Renewables & Efficiency (DSIRE) for the United States or the Natural Resources Canada website for Canada
- If you are hoping to take advantage of federal or local tax credits, talk to your accountant or financial advisor to make sure you qualify
Rebates in the United States
Electric, Gas and Propane Utilities
Many utilities (especially electric utilities and to a lesser extent natural gas utilities) are interested in reducing peak usage -- the amount of energy required during the hottest and coldest days of the year. They provide incentives for their customers to upgrade to more efficient appliances, particularly those that have earned the Energy Star label. Usually, the more efficient the system the larger the incentive. Typically, these companies offer cash rebates, but a handful of them apply the rebate as a credit toward your account. Some utilities will offer rebates on smart thermostats, or supply them for free. In addition to rebates some utility companies also offer low interest loans.
Some other utilities offer rebates when you switch from one form of energy to another. For example, a propane supplier may offer a rebate if you replace your oil furnace with a propane furnace. Many utilities are now offering rebates of up to $3,600 to homeowners who switch to natural gas, as well as rebates and tax credits to homeowners who install natural gas heating and cooling equipment. These rebates are not necessarily listed in the DSIRE or the Natural Resources Canada databases. One source for information on incentives for installing propane appliances is BuildWithPropane.com.
US Federal Programs
The US federal government offered a tax credit of up to $500 for the installation of qualified central heating and cooling equipment -- however, this tax credit expired Dec 31, 2013. But, a number of tax credits for residential energy efficiency have been renewed. These tax credits are for select Energy Star qualified products and are available for purchases made in 2016, as well as retroactive to purchases made in 2015. They cover 10% of costs up to $500 or a specific amount from $50-$300. The US government continues to offer a tax credit of up to 30% on geothermal heat pumps and some forms of solar water heating through the end of 2016.
US State Programs
In some states (such as NJ, which offers the CoolAdvantage and WarmAdvantage programs) there are state-funded programs that will give you an additional rebate based on your systems. The rebate amounts for these are also based upon a tiered criteria. Also, some manufacturers offer incentives when homeowners buy their higher-end systems. These incentive programs are typically only valid for a short period of time (typically in the Spring and the Fall), and the details change every season.
Many local governments offer incentives such as financing and property tax incentives to encourage homeowners to install efficient and renewable systems in their homes.
Rebates in Canada
For Canadian residents the best source to find incentives is the Natural Resources Canada website.
- Select your province
- If the list of rebates and incentives is overwhelming, select 'All Residential' as your Sector and be sure to also check off the rebate box
From this search you will find mainly utilities that offer rebates. Most of these rebates also will require a home audit prior to beginning the process of upgrading your system.
There are a couple of non-profit organizations in Canada that offer rebates for switching to a more energy efficient system such as Arctic Energy Alliance (AEA) in the Northwest Territories and Efficiency Nova Scotia.