It’s time to talk about the Inflation Reduction Act (IRA) and how it may affect your choices regarding heating and cooling in your home. We want to specifically look at the rebates and tax credits from the IRA, how you can benefit from them, and the ways we can help you.
The Inflation Reduction Act could potentially benefit you if you’re interested in purchasing energy-saving upgrades for your home. Specifically, the IRA offers several rebate programs that can help you improve your heating and cooling system to energy-efficient models so you can lower your bills and help reduce carbon emissions.
In this post, we’ll discuss the IRA’s impact on HVAC equipment in more detail.
The Basics of the IRA
The Inflation Reduction Act of 2022 is intended to invest in domestic energy production and manufacturing while reducing carbon emissions by 40% by 2030. The act includes $369 billion in Energy Security and Climate Change programs. Several of these programs incentivize consumers to buy energy-efficient products, such as electric heat pumps that are ENERGY STAR-certified. These heat pumps are the core part of the HVAC incentive program in the IRA.
HOMES and HEEHRA
There are two programs under the IRA that offer point-of-purchase rebates for customers who want to upgrade their homes with energy-efficient HVAC systems. These programs have different qualification criteria but offer similar rebates.
- The first program is the High-Efficiency Electrical Home Rebate Program (HEEHRA), which requires households to earn less than 150% of the area’s median income (AMI). The lower AMI, the higher the rebate.
- The HOMES Rebate Program is the second program and depends on the energy efficiency of the system purchase and IRS income requirements.
Each household can receive up to $14,000 in rebates for purchasing qualifying equipment. If a household purchases an energy-efficient heat pump, they can earn up to $8,000 in rebates. The two programs cannot be combined—you must apply to the program that gives you the larger rebate.
It’s important to note that the above rebates aren’t the same as tax credits. A rebate is money you receive upon the purchase of equipment, i.e. a point-of-purchase rebate. Tax credits are credits that you receive when you file your taxes.
Eligible homeowners who meet the IRS income requirements may qualify for an $8,000 tax credit if they install a qualifying heat pump. There is also the Energy Efficient Home Improvement Credit (25C), which increases the tax credit value from 10% of installed costs to 30% for the highest efficiency products up to a maximum of $2,000 for qualified heat pumps.
If you want to know more Inflation Reduction Act tax credit information as it relates to your home’s heating and cooling, feel free to talk to us. If you wish to purchase a qualifying heat pump, you must have licensed professionals handle the installation to receive any of the IRA rebates or credits—and we’re glad to help you there!
Note: We don’t have all the current information about how the IRA will work in Alabama. The Inflation Reduction Act provides federal funds to each state, but it is up to the states to set up their own programs and apply for federal IRA funds through the US Department of Energy. We’re keeping a close watch on the state developments so we can better help our customers to get the most benefit from making upgrades to energy-saving heat pumps.
“Your experience is what matters most!” Contact Douglas Cooling & Heating today to learn more about heat pump installation and the IRA benefits.