A Guide to Commercial Refrigeration Rebates | Heating & Cooling | AC Repair

The best time to plan for an HVAC or refrigeration upgrade is before your current system breaks down. Planning ahead not only prevents the stress of an emergency replacement but also allows you to take full advantage of available financial incentives. Many rebate programs require pre-approval, which is impossible to get when you need a new unit installed immediately. By thinking ahead, you can strategically use federal tax credits and local utility offers, including commercial refrigeration rebates, to maximize your savings. This guide provides the information you need to plan a cost-effective upgrade, ensuring you get the best equipment for your needs at the lowest possible price.

An HVAC or plumbing emergency can occur at any time. The need for equipment replacement often arises when you don’t have the budget for it. Fortunately, the Inflation Reduction Act (IRA) of 2022 includes tax credits that can help you save by investing in clean energy. We’ll look at tax credits, rebates, and other incentives in North Carolina you can benefit from.

25C Tax Credits You Can Qualify For

You can qualify for a credit equal to 30% of qualifying expenses, including energy efficiency improvements, residential energy property expenses, and home energy audits. These credits became available starting on January 1, 2023. In North Carolina, you can qualify for a total annual credit of $3,200. Here are some improvements and credits that are available:

Heat Pump: $2,000
Heat Pump Water Heater: $2,000
General Energy Efficiency Improvements: $1,200
Air Conditioner: $600
Furnace: $600
Water Heater: $600
Boiler: $600
Electrical Panel: $600
Energy Audit: $150
Kitchen Exhaust Hood – Demand Control Ventilation: $220
Refrigerator: Up to $55
Glass Door Reach-in Freezer: Up to $350
ARC Heat Pump: Up to $317
Connected Smart Thermostat: $60
Water Source Heat Pump: $110
High-Efficiency Fan: $110
High Volume Low-Speed Fan: $1,100

For more information on all available energy efficiency tax credits, check these Smart $aver® rebate pages from Duke Energy: [I only have the Asana links for these PDFs, not the actual pages, since I live in Florida]

Controls Equipment
New High-Efficiency Refrigeration Equipment
Controls
New High-Efficiency Heating and Cooling Equipment
Upgrades to Improve Operation of Existing Heating and Cooling Equipment
Upgrades to Make Existing Refrigeration Equipment More Efficient

Understanding the Annual Limits

General $1,200 Annual Limit

It’s helpful to think of these tax credits as having a yearly allowance. For many common energy-efficiency improvements, you can claim a credit for 30% of the cost, up to a total of $1,200 each year. This category covers a wide range of upgrades, including new central air conditioners, furnaces, boilers, and even electrical panel upgrades needed to support new equipment. The fact that this limit resets annually is a huge plus, as it allows you to plan your home improvements over several years to maximize your savings. If you’re considering an upgrade, our team can help you select qualifying residential HVAC equipment that fits both your home and your budget. For a complete list of what’s covered, the IRS provides detailed guidelines on its website.

$2,000 Annual Limit for Heat Pumps and Biomass Systems

Because heat pumps are highly efficient systems for both heating and cooling, they get special treatment under the Inflation Reduction Act. If you install a qualifying heat pump or heat pump water heater, you can claim a separate tax credit of up to $2,000. This is a standalone limit, meaning it doesn’t count toward the general $1,200 cap for other upgrades. This incentive makes switching to a modern, energy-saving heat pump more accessible than ever. According to North Carolina’s Department of Environmental Quality, these systems are key to reducing energy consumption across the state. Combining these credits allows you to claim up to $3,200 in a single year, making a significant dent in the cost of a major home comfort upgrade. If you’re curious about which heat pump is right for your home, we can evaluate your options during a virtual Tele-Tech appointment.

How Do I Save Money Using IRA Tax Credits?

If you make changes to your home that improve energy efficiency, you can qualify for tax credits, rebates, and incentives. These include upgrades to HVAC, refrigeration, and water heating equipment. If your older water heater uses more energy than necessary, you’re probably spending more on energy and water bills. A high-efficiency model can not only qualify you for a tax credit but also save on your monthly utilities. Tax credits are also available for electrical upgrades. A home that’s decades old with its original wiring is not as efficient as it could be and has potential safety hazards. However, important upgrades can be affordable. The IRA reduces the financial burden of specific upgrades with options such as:

High-Efficiency Electric Home Rebate Act (HEEHRA): Low- and middle-income homeowners can receive up to $14,000 on eligible energy-efficient upgrades. Low-income homeowners can be covered for 100% of the costs of professional electrical services and equipment (middle-income homeowners can be covered for up to 50% of these costs).
The HOMES Rebate: It provides an incentive to make energy-efficient changes that reduce total energy output. The cash back rebate ranges from $2,000 to $8,000 and homeowners in all tax brackets qualify (low- and middle-income homeowners can receive the highest rebates).
Energy Efficient Home Improvement Tax Credit: Homeowners can deduct up to 30% of their energy-efficient upgrades, given they adhere to the Consortium For Energy Efficiency and meet Energy Star requirements. The maximum rebate amount is $3,200.

How Do I Qualify for a Home Improvement Credit?

You can claim the credit for improvements to your main home (usually your primary residence). It must be located in the United States and be an existing home (not a new one). Landlords, off-site property owners, and those using the property solely for business purposes cannot claim the credit. However, if you use your home partly for business, you may still be eligible for the tax credit.

Who Can Claim the Credits?

Generally, these tax credits are designed for homeowners making qualified energy-efficient upgrades. To be eligible, the improvements must be for your main home—the one you live in most of the time. The property also needs to be an existing home located in the United States, so new construction doesn’t qualify for these particular credits. This is a fantastic opportunity for those looking to upgrade their current residential heating and cooling systems and save money in the process.

This means landlords and owners of properties used exclusively for business or rental purposes typically cannot claim these credits. However, if you use part of your home for a business, you may still qualify for a portion of the credit. It’s also important to note that some rebates are structured to provide more significant benefits based on income. For example, the High-Efficiency Electric Home Rebate Act (HEEHRA) can cover up to 100% of upgrade costs for low-income households and 50% for middle-income households, making these essential improvements more accessible for everyone.

How Do I Qualify for a Home Energy Audit Tax Credit?

The home energy audit must include an inspection and written report that identifies significant energy efficiency improvements and estimates the potential energy and cost savings. The energy audit must be performed by a certified home energy auditor, who must also prepare and sign the written report.

How Do I Claim the Energy Efficient Home Improvement Credit?

When submitting your tax return, you must file Form 5695, Residential Energy Credits Part II. The credit must be claimed for the tax year the equipment is installed.

Do Subsidies, Rebates, and Incentives Affect My Tax Credit?

Public utility subsidies and rebates are considered purchase price adjustments. Therefore, you may have to subtract them when calculating your credit. Rebates are subtracted if they:

Are based on the cost of the property
Come from someone connected to the sale
Aren’t given as a payment for services you provide.

State energy efficiency incentives are generally not subtracted. Most don’t qualify as rebates, even though many states label them as such. The exceptions are incentives that qualify as a rebate or purchase-price adjustment under federal income tax law.

Contact QRC to Learn More About Energy Efficiency Upgrades

We are a leading residential heating and cooling and commercial HVAC and refrigeration company in Winston-Salem, NC. Committed to putting our customers first, we specialize in energy-efficient solutions that save you over time. Special offers and financing help make our services more affordable. To learn more about our heating and cooling equipment options and service packages, submit a request form or call (336) 443-8641.

The Residential Clean Energy Credit

Beyond the annual credits for home improvements, there’s another significant federal incentive called the Residential Clean Energy Credit. This credit is aimed at homeowners who invest in systems that generate clean energy for their homes, such as solar, wind, or geothermal. Unlike the Energy Efficient Home Improvement Credit, which has annual dollar limits on specific upgrades, this credit is calculated as a percentage of the total cost of your project. This makes it particularly valuable for larger investments in renewable energy, helping to make these powerful systems more accessible for families looking to reduce their carbon footprint and long-term energy costs.

30% Credit with No Dollar Limit

One of the most attractive features of the Residential Clean Energy Credit is its straightforward structure. You can qualify for a credit equal to 30% of the cost of new, qualified clean energy property for your home. This includes the expenses for purchasing and installing equipment like solar panels, solar water heaters, and geothermal heat pumps. According to the IRS, there is no upper dollar limit on this credit, except for fuel cell property. This means if you spend $30,000 on a qualifying solar energy system, you could receive a $9,000 tax credit, directly reducing the amount of tax you owe.

Future Credit Reductions

While the 30% credit is generous, it won’t be available forever. The current 30% rate applies to qualifying property placed in service through the end of 2032. After that, the credit amount is scheduled to decrease. For property installed in 2033, the credit will drop to 26%, and in 2034, it will be reduced further to 22%. The credit is set to expire after 2034 unless it is extended by new legislation. This timeline encourages homeowners to consider making these clean energy upgrades sooner rather than later to take full advantage of the maximum available tax credit.

North Carolina’s Energy Saver Rebate Program

In addition to federal tax credits, North Carolina residents have access to state-specific rebate programs designed to make energy-efficient home upgrades even more affordable. These programs, funded through the Inflation Reduction Act, provide direct cash-back incentives to homeowners. Unlike tax credits, which reduce your tax liability, rebates give you money back after your purchase. This can significantly lower the upfront cost of a new heat pump or other electrical upgrades, making it easier to manage your budget while improving your home’s comfort and efficiency. These programs are administered through the North Carolina Department of Environmental Quality.

Understanding the HOMES and HEAR Programs

Two key programs available to North Carolinians are the HOMES Rebate Program and the High-Efficiency Electric Home Rebate Act (HEEHRA), often called the HEAR Program. The HOMES Rebate is designed for whole-house energy efficiency projects. It provides rebates from $2,000 to $8,000 for upgrades that measurably reduce your home’s total energy consumption. The HEAR Program, on the other hand, focuses specifically on helping low- and middle-income households switch to high-efficiency electric appliances, including heat pumps, electric stoves, and heat pump water heaters. Both programs aim to make energy savings accessible to more families across the state.

Income-Based Rebate Amounts

The HEAR Program is particularly beneficial for households that might otherwise struggle to afford major appliance upgrades. The rebate amounts are based on household income, with the goal of covering a larger portion of the cost for those who need it most. Low- and middle-income homeowners can receive rebates covering up to 100% of the project cost, with a maximum of $14,000. This can cover everything from the new appliance itself to the cost of installation and any necessary electrical panel upgrades, making a transition to a more energy-efficient home a realistic goal for many North Carolina families.

Key Rules for NC Rebates

To successfully receive these state rebates, it’s important to understand the rules and follow the correct process. These programs have specific requirements for both the equipment you install and the professionals who install it. Failing to follow the guidelines could result in your application being denied, so taking the time to get everything right from the start is crucial. This often involves careful planning, working with qualified contractors, and understanding how rebates might interact with other incentives you’re pursuing.

Using a Registered Contractor

Most state and utility rebate programs require that all work be performed by a licensed and registered contractor. This ensures the installation is done safely and meets the program’s efficiency standards. Working with an experienced team like QRC can help you meet these requirements. We stay up-to-date on the latest program rules and can help you select qualifying residential HVAC equipment. A professional contractor can also handle the necessary paperwork, making the rebate application process much smoother for you.

Planned Upgrades vs. Emergency Repairs

It’s important to note that most rebate programs are designed for planned upgrades, not emergency replacements. Many require pre-approval before you purchase and install new equipment. If your furnace fails unexpectedly in the middle of winter, you may not have time to go through the pre-approval process. This is why proactive planning is so beneficial. By considering an upgrade before your system fails, you give yourself time to research options, find the best equipment, and apply for all available rebates and credits to maximize your savings.

Commercial Refrigeration Rebates and Upgrades

Homeowners aren’t the only ones who can benefit from energy efficiency incentives. Businesses, especially those in the food service, grocery, or hospitality industries, can find significant savings by upgrading their commercial refrigeration systems. Outdated coolers, freezers, and ice machines can be major energy hogs, driving up utility bills month after month. Local utility companies and energy programs often provide substantial rebates for businesses that invest in modern, high-efficiency equipment. These upgrades not only lower operational costs but also improve reliability, reducing the risk of costly product spoilage and emergency repairs.

Finding Local Commercial Rebate Programs

Commercial rebates are typically offered through local power companies and regional energy organizations. These programs are designed to help businesses reduce their overall energy demand, which benefits the entire power grid. The first step is to check with your utility provider to see what incentives they offer for commercial services and equipment. An experienced partner like QRC, which serves businesses across Winston-Salem, Raleigh, and Charlotte, can help you identify the programs available in your specific area and guide you toward equipment that meets the rebate qualifications.

TVA EnergyRight Program Example

A great example of this is the TVA EnergyRight program, which partners with local power companies across its service area. This program offers direct cash incentives to businesses that purchase and install energy-saving refrigeration equipment. By providing money back for these upgrades, the program helps offset the initial investment cost, making it easier for businesses to adopt more efficient technology. These incentives are available for a wide range of equipment, from reach-in coolers to evaporator fan motors, allowing businesses to save money on both large and small-scale projects.

Common Rebates for Refrigeration Equipment

Rebate programs often target specific components and types of equipment known for delivering significant energy savings. By focusing on these common upgrades, businesses can strategically plan their investments to achieve the best return. The incentives are usually calculated per unit, so the more equipment you upgrade, the more you can save. These rebates make it financially smarter to replace aging, inefficient units with modern, ENERGY STAR® certified models that will continue to save you money for years to come.

High-Efficiency Reach-In Cases

For restaurants, convenience stores, and grocery stores, reach-in coolers and freezers are essential but can consume a lot of electricity. Upgrading to high-efficiency reach-in cases can make a huge impact on your energy bills. According to the TVA EnergyRight program, these modern units can cut your refrigeration operating costs by as much as 35%. With rebates available for qualifying models, the initial cost becomes much more manageable, and the long-term energy savings can directly improve your business’s bottom line.

Electronically Commutated Motors (ECMs)

The fan motors inside your refrigeration units run almost constantly to circulate cold air. Older, standard motors are often inefficient. Replacing them with electronically commutated motors (ECMs) is a simple but effective upgrade. ECMs are significantly more efficient and have a longer lifespan. Many utility programs recognize this and offer per-motor rebates to encourage the switch. For example, some programs offer a $50 rebate for each ECM installed, which can add up quickly if you have multiple refrigeration units.

Evaporator Fan Controllers

Another smart upgrade is installing evaporator fan controllers. These devices automatically adjust the fan speed based on the cooling demand, so the fans don’t have to run at full power all the time. This simple addition can lead to substantial energy savings without affecting performance. To incentivize this upgrade, utility programs may offer generous rebates. The TVA EnergyRight program, for instance, provides a $200 rebate for each evaporator fan controller installed, making it a cost-effective way to make your existing equipment more efficient.

Long-Term Benefits of Upgrading Commercial Refrigeration

While rebates provide an immediate financial benefit, the true value of upgrading your commercial refrigeration equipment lies in the long-term savings. Modern, energy-efficient systems use less electricity, which means lower monthly utility bills for the life of the equipment. They also tend to be more reliable, reducing the frequency of service calls and the risk of equipment failure that could lead to lost inventory. Investing in new commercial refrigeration is an investment in your business’s operational efficiency and financial health.

General Rules and Resources for Finding Rebates

Whether you’re a homeowner or a business owner, finding and applying for rebates can feel like a complex process. However, there are excellent resources available to help you identify the incentives you qualify for. The key is to do your research before you make any purchases. Each program has its own set of rules, deadlines, and application procedures. Understanding these requirements upfront will ensure you can successfully claim the savings you’re entitled to. A little bit of planning can go a long way in making your energy-efficient upgrade as affordable as possible.

Helpful Online Rebate Finders

A great place to begin your search is with online databases that collect rebate information from various sources. The ENERGY STAR® Rebate Finder is an excellent tool for both residential and commercial equipment. You can enter your zip code to find deals and programs in your area. Additionally, be sure to visit the website of your local electric or gas utility, as they often have a dedicated section for energy efficiency rebates. These resources can help you create a comprehensive list of potential savings opportunities for your project.

Important Rules to Know Before You Buy

Before you get started, it’s critical to read the fine print for any rebate program you’re interested in. Program requirements can be very specific, and a small misstep could make you ineligible. Pay close attention to details like eligibility dates, equipment efficiency ratings (such as SEER2 or ENERGY STAR® certification), and documentation requirements. Keeping organized records of all your purchases, invoices, and installation details will be essential when it comes time to submit your application.

Getting Pre-Approval

One of the most common requirements for rebate programs is pre-approval. This means you must submit an application and have it approved *before* you purchase or install your new equipment. This allows the program administrator to verify that your planned project meets all the guidelines. If you skip this step and buy the equipment first, you will likely be disqualified from receiving the rebate. Always check for pre-approval requirements as the very first step in your process.

Potential for Inspections

Some programs, particularly those offering large rebates for significant upgrades, may require a post-installation inspection. This is done to verify that the equipment was installed correctly and is operating at the expected efficiency level. For some tax credits, like the one for a home energy audit, the IRS specifies that the audit must be performed by a certified professional who provides a detailed written report. This is another reason why working with a trusted and qualified contractor is so important—they can ensure the work will pass any required inspections.

Frequently Asked Questions

What’s the real difference between a tax credit and a rebate? Think of it this way: a tax credit directly reduces the amount of income tax you owe at the end of the year. It’s a dollar-for-dollar reduction of your tax bill. A rebate, on the other hand, is like getting cash back after you make a purchase. You pay for the new equipment, submit an application, and the program sends you money back, lowering your total out-of-pocket cost.

Can I stack these federal tax credits with North Carolina’s state rebates? Yes, in many cases you can combine federal, state, and even local utility incentives to maximize your savings. However, it’s important to read the rules for each program carefully. Sometimes, a utility rebate might be subtracted from the total cost of your project before you calculate your federal tax credit, which can slightly change the final amount you save.

This seems like a lot to keep track of. Where should I even start? The best first step is to do your research before your current system fails. Start by visiting the ENERGY STAR® Rebate Finder and your local utility company’s website to see what programs are available in your area. Once you have an idea of the incentives, you can contact a trusted contractor to discuss which high-efficiency equipment qualifies and fits your home’s needs.

Do I need to have all the money for the new system upfront? Typically, you do need to pay for the equipment and installation first. You then claim the tax credit when you file your taxes and apply for rebates after the work is complete. Because this can be a significant initial expense, many HVAC companies, including QRC, offer financing options to help you manage the cost while you wait for those savings to come through.

I’m a business owner. Are there similar savings for my commercial equipment? Absolutely. While the specific programs are different from the residential ones, there are many incentives available for businesses. Local utility providers often offer substantial rebates for upgrading to high-efficiency commercial refrigeration, coolers, and HVAC systems. These programs help offset the cost of new equipment that will lower your operating expenses for years to come.

Key Takeaways

Secure Maximum Savings by Planning Ahead: Many valuable rebates require pre-approval, which isn’t possible during an emergency replacement. Proactive planning is the key to qualifying for every available incentive and lowering your total cost.
Combine Incentives for Deeper Discounts: Don’t settle for just one offer. You can often stack federal tax credits with North Carolina’s state rebate programs and local utility deals to significantly reduce the price of a new system.
Know the Difference Between Credits and Rebates: Tax credits reduce your end-of-year tax bill, while rebates provide direct cash back after your purchase. Understanding how each works helps you accurately budget for the upfront cost of your upgrade.

How to Save Money With Inflation Reduction Act Tax Credits