In August, the US passed the Inflation Reduction Act (IRA) to reduce greenhouse gas emissions and take steps toward cleaner energy. With nearly $369 billion in tax credits and rebates, homeowners will be able to make energy-efficient upgrades to their homes to help fight rising energy costs.
Heat pumps, HVAC units, water heaters, and electrical panels are all included in the IRA rebates and tax credits, but prices of this equipment are expected to go up by nearly 30% next year. So should you wait until next year for rebates and incentives, or should you upgrade now? We’ll break down the IRA and show you what the new Inflation Reduction Act means for homeowners.
Make your home more energy-efficient with a HEEHRA rebate.
The High-Efficiency Electric Home Rebate Program (HEEHRA) is an IRA incentive for homeowners to make energy-efficient home upgrades. The program offers an $8,000 point-of-sale rebate on high-efficiency heat pumps; however, the HEEHRA rebates are only available for low- and moderate-income families. Qualification depends on your household income and heat pump model.
So why heat pumps? Compared to furnaces and air conditioners, heat pumps move heat instead of generating it, making it a cleaner, more efficient way to heat and cool your home.
Claim the Energy Efficient Home Improvement Tax Credit (25C)
The Energy Efficient Home Improvement Tax Credit increases the tax credit limit for installing CEE high-efficiency equipment. Heat pumps, HVAC units, and water heaters are all included in this tax incentive, with credits totaling up to $2,000. This tax credit cannot be combined with the HEEHRA, but this incentive has no income restrictions. It will go into effect in 2023.
While these incentives are enticing for homeowners, they could mean rising costs in the HVAC field. The equipment cost is expected to increase nearly 30% next year, so those rebates won’t help as much. If you’re on the fence about upgrading your system, it may be best to buy a new system now while unit prices are lower.