Tax Breaks for Cooling Costs

The American Recovery and Reinvestment Act of 2009, signed by President Obama on February 17, aims to stimulate the ailing economy via a variety of measures, including tax breaks. As part of this initiative, homeowners can receive tax breaks on purchases aimed at making their homes more energy- efficient.

Families spend an average of $1,000 a year on heating and cooling their living spaces. Upgrading to an energy-efficient air conditioner will save you money— more now than ever—and curb your family’s energy expenditures. To take advantage of the tax break, your new system must meet certain requirements, including having a Seasonal Energy Efficiency Rating (SEER) of at least 16.

“The SEER is basically like measuring miles per gallon for a car. If you replace an older central air system with one of these qualifying models, you’d save an estimated 35 – 40 percent a year,” explains Bob Swilik, manager of strategic development for Carrier.

Consumers who purchase a qualifying cooling system this year or next will receive a tax credit covering up to 30 percent of costs, up to $1,500. Tax breaks also are available for projects such as upgrading to an eco-friendly furnace or installing new energy-efficient windows.

More than 84 percent of American homes are air-conditioned, and most employ central air systems which circulate air throughout the whole home and eradicate the sporadic hot spots that sometimes arise when you use window units. Carrier offers more system combination that qualify for the tax breaks than any other manufacturer, and these eligible products often come with additional benefits, according to Swilik.

“The systems that qualify for the tax credits typically have other comfort features. They will be able to dehumidify, so they control cooling and humidity and they circulate more air; higher SEER systems have better controls and are basically better products,” he explains.

A high-performing central air system also boosts a home’s resale value. “If you don’t have central air, it is probably going to be a problem to re-sell the house,” says Swilik. “And if you do upgrade to a better-efficiency model, that will impact the utility bills and the desirability of your home. The other factors that come along with these systems—the better humidity control the added comfort, the more circulation of air—all add to the value of the home.”

The ENERGY STAR designation denotes air conditioners that are about 1 percent more efficient than standard units. For a list of efficient cooling systems that have earned ENERGY STAR’s seal of approval, check out the database developed by the Consortium of Energy Efficiency (CEE) and the Air-Conditioning and Refrigeration Institute (ARI).

It’s important to note, though, that not all products that have earned the ENERGY STAR seal of approval qualify for the federal discount.