What is the Inflation Reduction Act?
Signed into law on August 16, 2022, the federally funded Inflation Reduction Act (IRA) gives you an opportunity to save on the cost of replacing or upgrading your HVAC system with higher-efficiency equipment that can reduce energy consumption and lower utility bills. The purpose is twofold:
To help homeowners obtain higher-efficiency equipment that helps reduce energy consumption and lower utility bills
To reduce the environmental impact of carbon emissions across the United States by 40% by 2030
Whether you’re thinking about installing a heat pump in the future or you installed one in 2022, the Inflation Reduction Act includes rebates you can use:
The Energy-Efficient Home Improvement Credit (also known as the 25C Federal Tax Credit) took effect on January 1, 2023, and covers:
Up to 30% or $1,200 annually for qualifying equipment
A $2,000 annual limit for heat pumps
The High-Efficiency Electric Home Rebate Act (HEEHRA) offers rebates up to $14,000 per household for the installation of high-efficiency heat pumps and other efficiency improvements
The HOMES rebate program, a $4.3 billion program that is part of the IRA, isn’t restricted by income level and is based on the actual performance of your whole-home energy efficiency and electrification improvements; the HOMES rebate program cannot be combined with the HEEHRA program, so talking with your tax consultant is important to determine which program works best for you
What the Inflation Reduction Act means for you
The IRA includes cost-saving credits and rebates when you purchase qualifying energy-efficient equipment for your home. By making improvements that electrify and/or reduce energy use, you may qualify for these tax credits and rebates while improving your home’s overall energy efficiency. Qualifying improvements include weatherization efforts, installing new electric appliances and installing electric heat pumps.
These benefits go beyond improving your month-to-month heating and cooling bills — many new, efficient heat pump systems that qualify for the IRA have features that improve indoor air quality through built-in humidity control.
