We also recommend installing your new system before year end to start benefiting sooner and take advantage of heat pump tax credits for 2024 for the quickest savings. Keep reading to see why you should upgrade to a heat pump before the end of the year.
Heat Pumps are Eligible for Incentives in 2025
Heat pump rebates and tax credits are a big reason why heat pumps are worth it in California. There are several incentives for heat pump installation in California in 2025.
The Cost of a Heat Pump: 2024 Buyer's Guide. The Short Answer Is: The average cost of a heat pump replacement can range from $4,200 to $8,400, depending on factors like the unit's size, efficiency rating, and the complexity of the installation.
Wait until 2025 for a more environmentally friendly unit knowing that's the way of the future and repairs in 8-10 years will likely be easier given that that's the new industry standard.
The quick version: Any household can claim a $2,000 federal tax credit (or 30% of the price, whichever is less) against the cost to install an air-source heat pump that meets modest efficiency requirements.
What SEER rating qualifies for tax credit 2024? Split ducted heat pumps and packaged heat pumps must meet a SEER2 rating of 15.2 or above. Non-ducted heat pumps must meet a SEER2 rating of 16 or above.
The amount of the credit you can take is a percentage of the total improvement expenses in the year of installation: 2022: 30%, up to a lifetime maximum of $500. 2023 through 2032: 30%, up to a maximum of $1,200 (heat pumps, biomass stoves and boilers have a separate annual credit limit of $2,000), no lifetime limit.
Depending on normal weather patterns, the best time to buy an air conditioner is in the Spring (March and April) and the best time to install a new furnace is in the fall (September and October).
HVAC Regulation and Refrigerant Changes
Starting in 2024, the U.S. Department of Energy (DOE) raised the minimum energy efficiency standards for HVAC systems. For homeowners, this means that any new air conditioning unit installed must meet higher Seasonal Energy Efficiency Ratio (SEER) ratings.
Heat pumps: 10 to 16 years. Furnaces and boilers: 15 to 20 years. Geothermal heat pumps: 25 to 30 years; ground loops will last upwards of 50 years. Solar: 25 to 30 years.
Early in the spring or fall may be the best time of year to buy a heat pump system and have it installed. There are a couple of reasons for this. Lower demand. HVAC companies are swamped in the heat of summer and the freezing temperatures of winter.
The heating and cooling requirements of a 2,000-square-foot home vary depending on factors such as the local climate and insulation levels. However, a home of this size will usually require a heat pump with a capacity of around 3–5 tons, which can cost $8,000–$16,000 depending on its brand and features.
Since a heat pump replaces a central AC, it may not make sense to get a heat pump if you have a newer AC. A better time to upgrade to a heat pump is when your AC is failing or older than 15 years. With a newer AC, it may be more worthwhile to see what incentives and opportunities emerge in the future.
Starting in 2025, the HVAC industry will shift toward using refrigerants with a lower GWP. Among the most discussed replacements are R-32 and R-454B. These refrigerants perform similarly to traditional refrigerants like R-410A but with a significantly lower environmental impact.
The SL25XPV heat pump boasts Lennox's TruHeat Performance, delivering a level of warmth that rivals traditional gas furnaces by moving heat rather than creating it. This process makes it not only efficient but also eco-friendly, as it consumes less energy while providing the same, or even better, comfort.
Several HVAC manufacturers have officially declared upcoming price hikes for 2024, garnering attention as a new wave of increases takes effect. There is a noticeable industry-wide trend of manufacturers elevating the prices of equipment, parts, and supplies.
This move technically went into effect on January 1st, 2023, so it's already been a year. Under the DOE rules, US HVAC manufactures will discontinue production of SEER 14 units, and they can no longer sell any units with that rating, either.
Winter and Early Spring are King
The colder months, especially winter and early spring, are generally considered to be the most prudent times to go shopping for a new air conditioner. It's the best time to be in the market for a number of reasons. Let's take a look at some.
The cost of replacing an HVAC system typically ranges from $6,224 to $11,434. This HVAC replacement cost depends on your home's size, the system type, and installation requirements. The estimate includes both a central air conditioning unit and a gas furnace, along with standard labor costs.
Heat pumps that meet or exceed the CEE highest efficiency tier, not including any advanced tier, in effect at the beginning of the year when the property is installed, and biomass stoves and boilers with a thermal efficiency rating of at least 75% qualify for a credit up to $2,000 per year.
Effective January 1, 2025, split system central air conditioners must meet SEER2 ≥ 17.0 and EER2 ≥12.0 to be eligible. Packaged central air conditioners must meet SEER2 ≥16.0 and EER2 ≥11.5 to be eligible.
An air conditioner with a higher SEER uses less electricity for the same cooling, saving you money on energy bills. As of January 1, 2023, the Department of Energy (DOE) will introduce the new SEER2 standard. SEER2 keeps the basic ideas of SEER but improves the testing methods to better match real-life situations.