President Biden signed the Inflation Reduction Act of 2022 into law in August in an effort to lower the United States’ greenhouse gas emissions. The Inflation Reduction Act is the United States’ largest investment in reducing greenhouse gases to date.
The Inflation Reduction Act of 2022 increased tax credits, rebates, and financial incentives for energy-saving heat pumps in 2023. If you’ve been considering replacing your heat pump, you’re in luck. Now is a great time for homeowners to make their homes more comfortable and energy efficient.
The federal income tax credit for heat pump installations increases this month, but to be eligible for the credit, you have to install a qualifying heat pump. On November 18, 2022, the Consortium for Energy Efficiency (CEE) announced its updated appliance efficiency rating (formally called the CEE tiers) which is used to determine which heat pumps will qualify for the federal tax credits beginning this year.
How much is the heat pump tax credit?
Beginning in 2023, you could be eligible for a tax credit of up to $2,000 for qualifying heat pumps under the new tax guidelines included in the Inflation Reduction Act.
What heat pump rebates and incentives are included in the Inflation Reduction Act?
In addition to tax credits, the new heat pump incentives under the Inflation Reduction Act of 2022 will be based on a variety of factors, such as annual income and program type. For households with low incomes, the new law provides a rebate of up to $8,000 on installation.
According to the U.S. Energy Information Administration, 51% of your home’s energy use is for heating and cooling. So, new energy efficient heat pumps are a great way to cut energy waste and make your home more comfortable.
What heat pumps qualify for federal tax credits?
You may be eligible for the new 25C Energy Efficiency Home Improvement tax credit, a $2,000 federal income tax credit for heat pumps. To qualify for the $2,000 heat pump tax credit, you need to know two things:
- What type of heat pump (ducted or non-ducted) you plan to install, and
- If the heat pump you are looking to purchase is eligible for the tax credit.
Are you interested in taking advantage of the new tax credit for heat pumps? If your answer is yes, Advance Mechanical can answer your questions about the tax credit and help you select a heat pump that qualifies. Call us at 252-355-9191 to schedule an appointment for a free replacement quote today.