Ultimate Guide to HVAC Rebates, Tax Credits, and Incentives in Michigan

Installing a more energy-efficient HVAC system can be costly. However, homeowners know that the return on investment in the form of lower energy bills is worth it. Even better, they can take advantage of rebates and tax credits to reduce the upfront installation cost and begin reaping their energy savings.

Michigan's major utility companies have also established incentive programs to help homeowners reduce their energy consumption and meet the state’s goal to achieve carbon neutrality by 2050. Many cost-saving programs exist to help homeowners cut their energy consumption and make home improvement projects more affordable, especially for households that earn less than $300,000 annually.

With the help of the following money-saving programs, you can more effectively decide which energy-efficient HVAC upgrades you want to pursue:

• Rebate programs
• Federal tax credits
• Utility company incentives

Contact Thornton & Grooms at (248) 644-7810! We work with utility companies in the Detroit Metro area to help homeowners find the right rebates and incentives for their HVAC installations and other home improvement projects.

Our knowledgeable team can help save you money, fill out paperwork, and file with the right agencies to take advantage of HOMES, HEEHRA, federal tax credits, and utility incentives.

Schedule with us today to see why we have nearly nine thousand 5-star customer reviews!

There are two nationwide rebate programs for homeowners looking to upgrade their HVAC systems. The High-Efficiency Electric Homes Rebate Act (HEEHRA) and Homeowner Managing Energy Savings (HOMES) programs fall under the landmark Inflation Reduction Act. You can save even more money using both rebate programs but cannot do so for the same project.

These programs are critical to helping the United States majorly slash domestic greenhouse gas emissions in the next decade as they will make energy-efficient house improvement projects more affordable. Read more about the Inflation Reduction Act in our blog, "Can You Save Money With the Inflation Reduction Act in Michigan?".

Michigan households that don’t already have a heat pump and make below 150% of the area median gross income are eligible for HEEHRA.

This program prioritizes heat pump installations as they can reduce energy usage by 30-60% compared to traditional heating and cooling methods, helping homeowners conserve energy and reduce their utility bills. Those eligible will have 50-100% of their heat pump installation, electrical panel replacement, or electrical wiring replacement costs covered. HEEHRA allocates a $14,000 maximum for the consumer rebate, specifically putting aside $8,000 for heat pump installations. This rebate program will roll out in late 2023.

Why the focus on electric heat pumps? The Department of Energy considers them some of the best HVAC systems for conserving energy as they are 30-60% more energy efficient than traditional ones.

On the other hand, the HOMES rebate is already live and has less strict eligibility rules. If a contractor can prove that a desired home improvement project will cut energy consumption by at least 20%, the Michigan homeowner will receive a rebate of up to $8,000.

Another way for homeowners to save money is with federal tax credits.

The first one we’ll cover is the 25C Non-Business Energy Property Tax Credit Program, which falls under the Inflation Reduction Act. This tax credit allows homeowners to deduct up to 30% of an energy-efficiency project’s cost from their taxes. The maximum cap on deductions is $1,200 per year. For example, you can receive a $150 tax credit for an energy audit and a $600 annual cap for electrical panel replacements and rewiring upgrades and use $450 for a different project. The only outlier is heat pump installations, which are capped at $2,000.

Next, let’s look at the Renewable Energy Tax Credit program. With this tax credit, you’ll receive a 26% tax credit for any Energy Star-certified geothermal heat pump installation completed before January 2024. To obtain the rebate, fill out IRS Form 5695 and submit it with your tax returns.

Thornton & Grooms can help you fill out any needed paperwork and submit it to the right firms. Call us at (248) 644-7810 or schedule an appointment for assistance.

DTE Energy has rebates for the following services:

• $25-$125 rebate for insulation
• $50 rebate for a smart thermostat
• $75 rebate for a tune-up
• $100-$500 rebate for a high-AFUE furnace
• $100-$500 rebate for a high-efficiency central air conditioner
• $150-$850 rebate for an air source heat pump
• $800 rebate for a ground source heat pump
• $1,000 rebate for a ductless mini-split heat pump

Xcel Energy offers a variety of HVAC equipment incentives for Michigan homeowners, such as:

• $300 rebate for an air-source heat pump
• $350 rebate for a split-system central air conditioner
• $1,500 rebate for a mini-split heat pump

Michigan Weatherization Assistance Program provides energy conservation services for low-income homeowners, such as:

• Wall insulation
• Attic insulation and ventilation
• Foundation insulation
• Air leakage reduction
• Smoke detectors
• Dryer venting

Consumers Energy offers various heating and cooling incentives for homeowners, such as:

• $65 rebate for a comprehensive HVAC tune-up
• $75-$500 rebate for a high-SEER central air conditioner
• $100-$500 rebate for a high-AFUE furnace

The team at Thornton & Grooms is ready to help you cut the costs of upfront HVAC installations and reduce your future energy bills with high-efficiency heat pump, furnace, and air conditioner systems. We’re one of the highest-rated HVAC companies in the Detroit Metro area. With over 85 years of experience, you know we have the expertise to help you fill out paperwork for HOMES, HEEHRA, 25C Tax Credit, and local utility incentives.

We provide convenient, flexible financing plans to help you save even more. Call us today at (248) 644-7810 or book below to be more energy efficient and save money!