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Tax Credits & Rebates in Colorado for Energy-Efficient Home Improvements

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Investing in energy-efficient upgrades for your Colorado home can be a major financial commitment that may set you back.

However, thanks to the Inflation Reduction Act, which was signed into law in August 2022, local families now have access to several tax credits and rebates that can help them save big on their energy-efficient home improvements.

Below, the home service experts at Absolute Plumbing, Electrical, Heating & Air cover some of the available tax credits and rebates homeowners can take advantage of to help them save on their home improvement projects.

Federal Tax Credits for Energy-Efficient Upgrades

Previously known as the 25C Tax Credit, the Energy-Efficient Home Improvement Credit is a federal tax credit available for qualifying energy-efficient upgrades made after Jan. 1, 2023.

Households may be eligible to receive up to a $1,200 annual credit, with a cap of $600 on each energy-efficient upgrade. Tax credits may be equal to 30% of the total cost for all qualifying home improvements.

Qualifying energy-efficient upgrades include:

Systems must satisfy specific energy efficiency criteria, such as an ENERGY STAR® rating, to be eligible for these tax credits.

These requirements vary by system, so it’s essential to consult with a knowledgeable technician to understand whether your selected system qualifies for the maximum rebate amount.

Colorado Tax Credits & Rebates for Heat Pumps

Along with federal tax incentives, Colorado offers special savings to homeowners for heat pumps and heat pump water heaters.

The program officially went into effect on Jan. 1, 2024, and provides a tax credit for ENERGY STAR®-certified heat pump installations, including for these systems:

  • Air-source heat pumps
  • Combined-source heat pumps
  • Ground-source heat pumps
  • Heat pump water heaters
  • Thermal energy networks
  • Variable refrigerant flow heat pumps
  • Water-source heat pumps

To qualify for these tax credits, Colorado residents must select a system designed to satisfy at least 80% of their annual heating needs.

A registered contractor must perform all installations, and contractors must provide the tax credit to their customers at the point of sale as a discount on the installation cost.

All contractors must complete and submit the necessary paperwork for equipment installations to the Department of Revenue. The state will then reimburse them through a tax credit once the contractor files their taxes. No paperwork is required by the customer to receive the discount.

Upgrade Your Home’s HVAC Equipment Today

If you’ve been putting off your energy-efficient home improvements due to the high costs involved, don’t delay your upgrade any longer.

With these available tax credits, you can save big on your next project, and Absolute Plumbing, Electrical, Heating & Air is here to help you navigate the process from start to finish.

Offering plenty of ENERGY STAR®-certified products that satisfy the strict requirements to obtain these tax credits, our team helps ensure your energy-efficient upgrades are eligible to receive the maximum benefit.

Let us help you get the most out of available tax incentive programs — schedule your energy-efficient home improvement project by calling 720-669-4188 today. 


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