You may have heard about how the Inflation Reduction Act (IRA) includes rebates and tax credits for the purchase of HVAC systems. Well, you’ve heard right! Components of the IRA were created to help homeowners save money on eco-friendly HVAC upgrades while providing some environmental benefits as well. It’s a win-win for homeowners and the Earth.
With so many opportunities for savings on the horizon, it’s essential to understand how the IRA directly impacts you. By taking the time to familiarize yourself with some of the programs available, you stand to reap the maximum benefits that are available to you as a homeowner.
There are 3 programs in the IRA that affect homeowners: the HOMES and HEEHRA programs, and the 25C residential energy efficiency home improvement tax credit. Let’s take a look at all 3 programs and also discuss SEER2 updates that affect cooling systems.
The SEER2 Update
The US Department of Energy (DOE) implemented an increase in the minimum efficiency standards for total comfort systems. This became effective as of January 1, 2023, and impacted the costs to purchase and install systems such as:
- Air conditioners
- Heat pumps
- Single packaged units
- Mini splits
In a nutshell, this essentially means that these systems MUST meet a minimum SEER2 rating to be purchased and installed. According to the SEER2 website, these are the minimum ratings for the northern region.
- To meet SEER2 requirements, residential central air systems below 45,000 Btu must have a SEER2 rating of 13.4.
- Residential central air systems 45,000 Btu and above must have a SEER2 rating of 13.4 as well.
- Heat pumps in any region must meet 14.3 SEER2 and 7.5 HSPF2 (8.8 HSPF) requirements.
The HEEHRA Program
The benefits that are available via this program are dependent on household income. Low- to median-income households stand to save up to $14,000 with rebates related to electrification projects.
Qualified households can receive a rebate of up to $8,000 for an all-electric ENERGY STAR heat pump for home heating and cooling. They can also qualify for up to $1,750 on a heat pump water heater.
The HOMES Program
This program provides low- to median-income households with up to $8,000 in rebates and high-income households with up to $4,000 to make their homes more energy efficient by cutting their energy usage by at least 35%. Services include heat pump and HVAC upgrades. These performance-based incentives are based on your home’s actual energy savings AFTER installation.
What is the 25C Tax Credit?
The 25C residential energy efficiency home improvement tax credit already existed before the IRA, but the IRA extended its benefits to 2032. The tax credit was also increased to 30% of the total installation costs.
Homeowners can get up to 30% back, up to $1,200 per year, for home improvements that’ll increase their home’s energy efficiency. This includes things like adding insulation or replacing exterior windows with energy-efficient ones.
Can I combine HEEHRA and HOMES rebates?
The HEEHRA program and HOMES rebates are unable to be combined with one another. However, a benefit of the 25C tax credit is that it can be combined with either HEEHRA or HOMES.
When can I take advantage of these offers?
It may take some time to roll out these programs as state governments figure out a way to make the rebates accessible to their residents. Before you jump in with both feet, give us a call so that we can best advise you on how to maximize the benefits provided by the IRA.