The Inflation Reduction Act (IRA), passed in 2022, includes several provisions affecting HVAC and plumbing contractors. It offers new energy-efficient tax incentives and rebate programs that may benefit its customers.
These incentives highlight future trends in home electrification and can help you develop a business strategy around them. Here are four essential points you should know.
What to know what the Inflation Reduction Act means for your HVAC system? Check out more information here at River Valley.
1. Tax credits
No matter if you are searching for new energy-efficient HVAC equipment or simply upgrading windows and doors, the Inflation Reduction Act offers great incentives by expanding several tax credits that reward homeowners who choose green initiatives.
The Act expands and increases the energy-efficient home improvement credit, which allows you to claim up to $2,000 for adding insulation, high-efficiency air conditioners and furnaces.
Furthermore, an energy audit conducted by a certified HVAC inspector can earn you up to $150 in energy audit credits – another significant incentive.
In order to encourage homeowners to electrify their homes, the bill offers point-of-sale discounts. This might result in thousands in annual savings for American households.
This legislation expands and extends the Section 45L New Energy Efficient Home credit, available for new construction or substantial retrofits of single-family, manufactured, and multifamily dwellings that meet ENERGY STAR program requirements and are certified energy efficient. It also offers deductions for certain new energy-efficient commercial buildings.
The Act also makes the R&D tax credit more flexible, enabling eligible businesses to transfer up to 20% of their credit value directly to another qualified taxpayer, and extends both production tax credit and solar investment tax credit for renewable electricity generation.
This initiative is creating jobs, reviving neighborhoods, reducing energy costs for households, and fighting climate change.
Rebates are being implemented by state energy offices now, and they will update this website as more details regarding these programs become available from the US Department of Energy and state energy agencies.
The Inflation Reduction Act contains several rebates for homeowners who upgrade to high-efficiency HVAC systems and other energy-saving home improvements, providing Americans an incentive to reduce carbon emissions through energy-efficiency home investments.
A commonly utilized tax credit program enables savings of up to $3,200 when buying energy-efficient air conditioners, furnaces, heat pumps, and similar equipment. Many companies have several solutions that qualify for these rebates – like its all-electric Goodman Heat Pump, which helps lower your carbon footprint while saving thousands each year!
Another IRA program expected to become available by late 2023 offers point-of-sale rebates to low and moderate-income households electrifying their homes with equipment certified as ENERGY STAR compliant, such as water heater replacement or breaker box upgrades. Rebates vary based on energy savings achieved.
3. Clean energy initiative
While the Inflation Reduction Act accomplished many things, including helping keep energy costs under control and supporting American manufacturing, its focus lies on expanding non-fossil fuel options – such as replacing older, polluting furnaces with cleaner technology such as electric heat pumps.
IRA’s clean energy incentives also include the 25C residential energy tax credit for home improvement projects, an extension of the home energy efficient property deduction made permanent in 2021.
When combined with state rebates and other incentives, these programs can offer New Yorkers significant savings when installing energy-efficient systems such as heating, ventilation, and air conditioning (HVAC) systems and insulation upgrades, windows, doors, or electrical upgrades with ENERGY STAR certifications.
This legislation expands and extends energy efficiency tax credits. In addition, it offers up to $2,000 credits for installing electric heat pumps in homes – saving working families and small businesses money on utility bills while protecting them against fluctuating fossil fuel prices.
According to outside groups, this legislation will help bring down electricity rates and gas prices by 2030 for Americans – Florida Power & Light plans to return an estimated $4 Billion in savings to its customers!
Other provisions include increasing investments in battery and electric vehicle (EV) manufacturing by doubling credit investments, as well as increasing investment tax credits for new offshore wind farms and NOAA’s hurricane hunter fleet and supercomputing capacity to help make America climate-ready.
4. Other incentives
The Inflation Reduction Act offers tax credits and rebates to encourage Americans to reduce energy usage, fight climate change, and save money over time on bills.
HVAC specialists may be eligible for further incentives under this law if they include sustainable energy technologies in their projects, such as geothermal and solar panels. As a result, there is a win-win situation where HVAC specialists may help the environment become cleaner and more sustainable while also enjoying lower operating costs.
The legislation also allows funds to assist American families with undertaking comprehensive energy-efficient home improvements through the Home Owner Managing Energy Savings (HOMES) rebate program.
This provides households with point-of-sale rebates when they complete eligible upgrades that meet minimum energy use reduction requirements modeled or verified through modeling or verification.
Take advantage of the Inflation Reduction Act for HVAC easier than ever with state rebate programs and incentives offered by PECO, First Energy Companies and other local utility companies.
When planning to upgrade or enhance energy efficiency within your home, be sure to speak to an HVAC professional about any local rebates or incentives available – regular maintenance is integral in keeping systems functioning at their optimal levels. It is key to keeping up with evolving regulations.