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Inflation Reduction Act

What is it, and how it affects you

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The Inflation Reduction Act (IRA) covers new and reinstated tax laws that will affect individuals and businesses, including a number of credits and deductions and/or rebates. These non-refundable home energy tax credits are currently in effect and are known as 25C Tax Credit


The High-Efficiency Electric Home (HEEH) Rebate Program’s start date is currently unknown / TBD and is awaiting guidance from DOE, EPA, and IRS.  The Home Owner Managing Energy Savings (HOMES) Rebate Program for whole-home retrofits starting on or after August 16, 2022 and are completed by September 30, 2031.

Specifically for HVAC, the Inflation Reduction Act can provide tax credits and point-of-sale rebates equaling thousands of dollars towards the replacement of aging equipment with the installation of high-efficiency HVAC equipment. Contact your local TemperaturePro expert and we can help find the solution that works for your home.

Nonbusiness Energy Property Tax Credit (Previous 25C Tax Credit) 

Qualifying customers that updated HVAC equipment can receive tax credit equal to 10% of energy efficient equipment purchase up to $300 on a variety of select heat pumps and air conditioning equipment ranging from 14 SEER to 16 SEER and up. 
  • This tax credit is eligible on the homeowner’s principal residence and must not exceed $500 in total credits received since 2005. 
  • Nonbusiness energy property tax credit, a previous law under Section 25C, is extended to December 31, 2032 for property placed in service after December 31, 2021.

Energy Efficient Home Improvement 25C Tax Credit (Current System Credits)

Energy Efficient Home Improvement Tax Credit (Section 25C) provides tax credits for installed equipment that exceeds CEE’s highest tier (not the advanced tier) and has no income level limitations. Qualifying customers that updated HVAC equipment beginning in the calendar year of 2023 can receive tax credits equal to 30% of cost incurred up to $1,200 annually including: 
  • $600 for eligible air conditioners
  • $600 for eligible furnaces
  • and/or $2,000 annually for purchase of eligible electric heat pumps. 
This tax credit must be the homeowner’s principal residence and cannot be combined with the “High-Efficiency Electric Home Rebate Program” (HEEH). 

Energy Efficient Home Improvement 25C Tax Credit (Current Energy Audit) 

Qualifying customers can receive tax credits for a home energy audit performed in the calendar year 2023 or later. The tax credit is equal to 30% of cost incurred up to $150 for a Home Energy Audit that identifies the best energy efficiency improvements. The Home Energy Audit:
  • Must be conducted by a certified home energy auditor
  • Must be the homeowner’s principal residence, and 
  • Cannot be combined with the “High-Efficiency Electric Home Rebate Program” (HEEH).

Homeowners who improve their primary residence will find the most opportunities to claim a credit for qualifying expenses. Renters may also be able to claim credits, as well as owners of second homes used as residences. The credits are never available for improvements made to homes that you don’t use as a residence.

What HVAC equipment can qualify for the 25C Tax Credits? 

These expenses may qualify if they meet the requirements:

  • Exterior doors, windows, skylights and insulation materials
  • Central air conditioners, water heaters, furnaces, boilers and heat pumps
  • Biomass stoves and boilers
  • Home energy audits

For a complete list of eligible products visit The Consortium for Energy Efficiency

For the official requirements on what qualifies for the 25C tax credits and to view Frequently Asked Questions, visit the U.S. Department of Energy

To claim the tax credits on your federal income tax returns, we recommend TemperaturePro customers seek advice from a certified tax professional. However, in previous years, customers filing their own taxes needed to fill out Tax Form 5695 and follow these instructions provided from the IRS.

The specifics of the rebate programs are subject to variation across different states and are yet to be finalized. These programs may be administered either by utility companies or state-run entities. The bill includes a provision that urges the Department of Energy (DOE) and state initiatives to collaborate and ensure that the rebates are conveniently accessible to consumers at the time of purchase, integrated into their out-of-pocket expenses.

 

More Information will be provided as soon as it becomes available. Check with your local TemperaturePro experts for the latest information.

 

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