Stay warm and save money with heat pumps

October 2024

It’s that time of year when most of us are either grateful for our home’s heating system or wishing we had addressed an update earlier. Staying warm in an energy-efficient home is a cozy way to welcome winter.

And, there can even be money savings in several forms for energy efficiency with heating as well as with other household appliances. In this column, we will talk about a few of those savings, starting with the heat pump and the ductless heat pump. 

If you’ve read this column for a while, you’ll will already know that we here at NeighborWorks of Grays Harbor often sing the praises of heat pumps and ductless heat pumps as being an efficient, environmentally friendly, economically sound and comfortable source of consistent heat in Pacific Northwest homes.

We still think so! Before we talk about the benefits of installing a new heat pump, however, let’s talk about what we need to do to maintain a heat pump so that it operates to it maximum potential.

Maintaining a heat pump

According to the U.S. Department of Energy, a well-maintained heat pump can consume 25 percent less energy than one that is severely neglected. Maintenance can also sustain the life of your heat pump. Check with the manufacturer or installer as to how often you need your unit professionally serviced, and do what is recommended to keep it working in tip-top shape, including keeping the units clean, making sure they are unobstructed and regularly cleaning or replacing the filters (depending on your unit).

Money saving for energy saving

Ductless heat pumps typically save 25 to 50 percent on electric heating costs. But for many people in Grays Harbor, this comfortable and reliable heat can also be a money- saver in itself.

An $800 rebate is available for pre-approved single-family or manufactured homes located within our PUD’s service area. Call the PUD at (360) 538-6383 or e-mail them at EnergyServices@ghpud.org to ask whether you might be eligible for this rebate program.

Other energy efficient rebates

The Grays Harbor PUD offers several other rebates for energy-saving investments. Some of them require prior approval, so make sure to talk with the PUD before you begin your project!  For those who meet the guidelines, having their home’s ducts sealed, can include up to a $250 rebate. Making sure the “delivery system” of ducted heat sources isn’t leaking makes a ton of sense!

Also, a heat pump upgrade or conversion (from a home that had an electric forced-air furnace) can include incentives of $1,000 for an air source heat pump conversion, $1,200 for a variable speed heat pump conversion and $200 for an upgrade to a variable speed heat pump.

Other money savings include $140 rebate for qualifying installations of a smart thermostat and $700-$900 for a new heat pump water heater.

Then there are the rebates for Energy Star certified appliances. Purchasing an Energy Star clothes washer can earn a $30 rebate and an Energy Star-certified clothes dryer is worth a $50 rebate.  

To get a clear explanation and specific details for each of the rebate programs go to the Grays Harbor PUD’s website at ghpud.org and look under “energy efficiency” then “residential programs.”  

Remember, it’s not just the rebate itself that saves money, all the things that have rebates will keep saving you money through lowered energy bills.

Federal Tax credits

But wait, there’s more!

Federal tax credits may also be available for residential efficiency upgrades. (Even if you don’t qualify for the heat pump rebate program, you could qualify for the federal tax credit if you are adding or replacing a heat pump.) Talk to your accountant and/or visit the Department of Energy’s website.

That’s right, people who make certain energy-efficient improvements in their home during the 2024 calendar year can qualify for a tax credit up to $3,200.

A tax credit means you won’t have to pay as much in taxes. After what you owe the federal government in taxes is determined, an eligible tax credit is a dollar-for-dollar reduction in your tax bill. (When you have a tax credit, the amount of money you owe goes down the same dollar amount. However, this credit is nonrefundable, so you can’t get back more on the credit than you owe in taxes. Also, you can’t apply any excess credit to future tax years.)

According to the Internal Revenue Service (IRS) website, www.irs.gov, beginning Jan. 1, 2023, the tax credit is 30 percent of certain qualified expenses. That includes  qualified energy efficient improvements installed during the year, residential energy property expenses and home energy audits.

If you didn’t make any of those improvements in 2024, knowing about this program, which will last through 2032, may make a difference as you plan for household improvements in the future.

The maximum credit that can be claimed each year is $1,200 for energy property costs and certain energy efficient home improvements including insulation and air sealing materials or systems, with a $250 limit per door ($500 total), $600 limit on windows and skylights, and $150 limit on home energy audits.

In addition, there is up to $2,000 allowed each year for qualified heat pumps, biomass stoves or biomass boilers.

Residential energy property

Residential energy property that meets outlined energy efficiencies, can qualify for a credit up to $600 per item installed. The “qualified property” includes new central air conditioners, natural gas, propane or oil water heaters; natural gas, propane or oil furnaces and hot water boilers.

Heat pumps and biomass stoves and boilers

Heat pumps and biomass stoves and boilers must have a thermal efficiency rating of 75 percent or more to qualify for the credit of up to $2,000 per year. 

Which houses qualify?

To qualify for the tax credit, the home must be your primary residence and not a brand-new home. Also, the home improvements must meet energy efficiency standards and be new – not used – systems and materials.

To claim the Energy Efficient Home Improvement Credit, file form 5695, Residential Energy Credits Part II, with your tax return. (Or ask your tax professional to do that on your behalf.) The tax credit must be claimed in the year the energy efficient materials were installed, not just purchased.

Eric Bjella is the executive director of NeighborWorks of Grays Harbor; a nonprofit organization committed to creating safe and affordable housing opportunities for all residents of Grays Harbor County. For questions about home repair, housing counseling, homebuyer education and financing, call 360-533-7828, listen to the extension picks that will best help you and leave a callback name and number.