Inflation Reduction Act Rebates and Tax Credits

The Inflation Reduction Act (IRA) is a concerted effort to dramatically reduce emissions, slash Americans’ energy costs, create high-paying jobs, and boost our country’s efforts to address the growing climate crisis. This legislation has big goals but can potentially benefit your household through valuable Inflation Reduction Act rebates and tax credits. These credits and rebates can help offset the out-of-pocket expenses related to new energy-efficient HVAC system upgrades for your home. In addition to improving your family’s lives now, using IRA HVAC rebates to upgrade to a new, more energy-efficient HVAC system can potentially increase your home’s value.

Understanding the Inflation Reduction Act and What It Means to You

The money invested in the Inflation Reduction Act rebates and tax credits is intended to combat climate change by investing in green technology and making homes nationwide more energy efficient.

The IRA represents governmental investment in clean energy and addresses climate concerns. IRA rebates and tax credits were introduced to make updating your home to maximize energy efficiency more affordable. Things like modernizing your HVAC system can be done with financial assistance. Not only does an HVAC tax credit or a rebate make the upgrade potentially more affordable, but it can also translate to savings on your monthly utility bills.

The IRA provides several benefits to American families, including:

HVAC rebates, tax credits, and discounts to make homes more energy-efficient
Reducing home energy costs

One goal of the IRA is to reduce carbon emissions by 40% by the year 2030. To accomplish this, the IRA rebates and tax credits reset each year through 2032, offering renewed incentives for greater energy efficiency. For instance, you can optimize your HVAC tax credits and rebates by making upgrades to your system every year. You might upgrade your air conditioner this year and replace your furnace the following year.

A Summary of the IRA

The IRA of 2022 aims to cut carbon emissions in our country by 40% by the year 2030. To this end, $369 billion will be invested in energy security and climate change programs over ten years. A host of IRA rebates and tax credits are provided as incentives for homeowners to make various energy efficiency improvements, thereby cutting utility bills right along with emissions. The IRA tax credits and rebates can generally be applied each year to upgrades like better-insulated windows and doors as well as energy-efficient heat pumps, water heaters, and central air conditioning.

The IRA rebates and tax credits include several provisions that can save homeowners money when they upgrade the energy efficiency of their homes.

Energy-Efficient Home Improvement Tax Credit

This expansion of the pre-existing 25C tax credit allows homeowners to deduct up to 30% of the total cost of eligible home improvements. There are no income qualifications as a part of this 25C tax credit. You qualify if your tax liability is high enough to offset the tax credit. This HVAC tax credit can be used alone or in conjunction with other IRA rebates and tax credits.

High-Efficiency Electric Home Rebate Program (HEERA)

This component of the IRA establishes a series of HVAC rebates and rebates on energy-efficient home upgrades. The rebates are designed to provide lower- and middle-income households a financial incentive to optimize their energy efficiency and lower their emissions and utility bills. Eligibility for this part of the program is based on income.

Households earning up to 80% of the area mean income (AMI) levels qualify for the highest rebate amounts.
Households earning between 80% and 150% of AMI qualify for lower rebates.

Whole Home Energy Reduction Rebate Program (HOMES)

Unique to the IRA, the HOMES program offers rebates based on the amount of energy your household saves. While the 25C tax credit and HEERA rebates incentivize the purchase of energy-efficient upgrades, HOMES rewards homeowners for the resulting energy savings. Rather than a product-specific incentive, HOMES rewards a holistic approach to energy efficiency, including HVAC upgrades, improved insulation, and conscientious usage.

The IRA rebates and tax credits provide a holistic approach to encourage energy efficiency and the adoption of clean energy technologies. Homeowners can leverage multiple incentives, including HVAC tax credits and rebates for the same eligible upgrade. All upgrades must comply with the specified energy-efficient ratings of the Consortium for Energy Efficiency and Energy Star.

HVAC tax credits through the IRA can be claimed for the 2023 tax filing. According to the Department of Energy, HEEHRA and HOMES rebates should start rolling out in June of 2024. By early 2025, they should be available in most locations. Your state energy office can provide the most up-to-date information for your area.

The IRA Rebates for Heat Pumps

Heat pumps are front and center for rebated upgrades with the IRA. Because they are a far more energy-efficient solution to heating and cooling homes than a furnace and A/C compressor, heat pumps are eligible for hefty HVAC rebates of 30% to 50%. However, many Americans may qualify for 100% rebates for their entire heat pump system up to $8,000.

Some of the IRA rebates and tax credits are based on income. How much of an IRA heat pump rebate you qualify for depends on how your household income compares to the median income in your area. If your income is 80% or less of your area’s median income, you may qualify for the 100% HVAC rebate up to $8,000 for a heat pump upgrade. If your income is 81% to 150% of your area’s median income, you may qualify for a 50% rebate, up to $8,000. If your income is more than 150% of the median income in your area, you will likely still qualify for a 30% tax credit up to $2,000.

The IRA heat pump incentive is known as The High-Efficiency Electric Home Rebate Act (HEEHRA). This HVAC rebate program allows you to enjoy the convenience of point-of-sale rebates without the hassle of red tape, paperwork, or long delays. Improving your home’s heating and cooling, cutting your utility bills, and reducing your carbon emissions by installing or upgrading a heat pump has never been more affordable. Trust your local Aire Serv® to make it easy, too. Schedule an appointment with your local Aire Serv professional, and we’ll install, maintain, and service your heat pump for you.

The IRA Rebates for Water Heaters

After your HVAC system, your water heater is typically your home's biggest energy-consuming appliance. So, the IRA rebates and tax credits provide additional incentives to slash your emissions on heating your water. However, the IRA water heater rebates apply specifically to heat pump water heaters, a significant upgrade over conventional water heaters.

Heat pump water heaters perform like refrigerators by transferring heat. Rather than generating heat outright, as conventional water heaters do, heat pump water heaters transfer existing heat from the surrounding air into the water in your tank. As a result, heat pump water heaters perform at two to three times the energy efficiency of conventional water heaters.

Your household may qualify for up to $1,750 rebates for a heat pump water heater or up to $2,000 in tax credits. When you take advantage of your IRA water heater rebate, rest assured that your friendly Aire Serv professionals can install the heat pump water heater for you and provide the maintenance and service for it moving forward. (If you need your water heater serviced in the meantime, we’re here to help you with that, too!)

For HVAC and Heat Pump Service You Can Trust, Call Aire Serv

The IRA rebates and tax credits provide significant incentives to help homeowners upgrade their HVAC systems and reduce their utility bills and carbon emissions. Learn more about how the IRA rebates can help your family. When you’re ready to use your HVAC tax credit or rebate and start saving on your monthly utilities, call us or request an appointment with your local Aire Serv professional. We’ll be happy to review your options and install your new HVAC system, heat pump, or heat pump water heater today. All of our services are backed by the Neighborly Done Right Promise^™, which means we’ll get the job done right!

The information provided herein as well as any corresponding documents are obtained from publicly available sources, including federal agencies and governmental entities, member companies, other leading trade associations and consultants. You are encouraged to monitor publicly available information and to always follow federal, state and local health organization guidance and government mandates. Independent local counsel is also recommended.

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