HVAC and the Inflation Reduction Act

The Inflation Reduction Act includes the “High-Efficiency Electric Home Rebate Program” or HEEHRP. The program provides rebates for up to $14,000 per household including up to $8,000 for qualifying heat pumps, up to $4,000 for electrical service upgrades, and up to $2,500 for electrical wiring (other rebates not pertaining to HVAC are also included). While this is a federal program, individual states will implement the program with guidelines and rebate eligibility will be based on equipment efficiency and income.

Do I qualify for a Rebate?
Rebates will be available to those with incomes in two categories:

Qualified homeowners with incomes up to 80% of the local median income will receive a rebate of $8,000 (or the full cost of installation if under $8,000).

Qualified homeowners with incomes between 80%-150% qualify for a rebate of 50% of installation cost up to $8,000. The program appropriates $4.5 billion of funds, over $200 million of which is designated for NC and over $150 million for TN, and will distribute the funds to state energy departments to administer the rebate program. The duration of the program will extend for up to 10 years or until the funds are depleted and will be based on the number of rebates claimed.

*NC and TN have yet to provide guidance for claiming the rebates. Installations retroactive to 1/1/23 MAY qualify if allowed by individual state energy departments. However, the official direction regarding individual qualifications has yet to be determined. This page will be updated with more information as it becomes available and guidance is issued from the states.

25C Tax Credit

The Energy Efficient Home Improvement (25C) Tax Credit is provided for the installation of energy efficient appliances including qualified heat pumps, air conditioners, and gas furnaces as well as electric panel upgrades.

How much is the tax credit?
Up to $600 EACH for installation of heat pump, gas furnace, air conditioner, and breaker panel (other items not pertaining to HVAC may also qualify with a max of $1,200 annually but increased to $2,000 when a heat pump is included).
How long will the tax credit be available?
The current 25C credit is renewed and expanded for 10 years (through 2032) and increases for installations beginning January 1st, 2023 from 10% to 30%.
Qualifying Equipment:
Equipment must meet the following criteria:

SEER2 ≥ 16

EER2 ≥ 12

HSPF2 ≥ 9
Is there an income limit to claim the tax credit?
There is no income limitation. The credit cannot be combined with other federal programs but may be combined with state or local programs (if allowed by individual programs).

**It has yet to be determined if the HEEHRP and 25C may both be claimed in the same year for the same project.
Where can I find out more about tax credits?
For more information about tax credits for home improvements, please visit the EnergyStar.gov Home Owners page Energystar.gov

For general tax credit information and FAQ’s, please visit the EnergyStar.gov FAQ page Energystar FAQ

Mountaineer Heating & Cooling highly recommend consulting a tax professional for advice on all rebates and tax credit eligibility.  This page will be updated as more information is available and guidance is issued by the state.


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