Inflation Reduction Act – FAQ

To help reduce inflation, decrease carbon emissions, and more, the U.S. Government has passed the Inflation Reduction Act (IRA), which includes several tax credits for installing ENERGY STAR® certified home heating and cooling products. The IRA consists of rebates and tax credits for HVAC.

There are two rebate programs available. Rebates are administered at the state level and favor lower-income households. Federally funded rebates cannot be combined and are intended for immediate, point-of-sale benefit.

There are four tax credits available. Tax credits are federal income tax credits available to anyone with taxable income. Tax credits can be combined, and rebates can be filed for the following calendar/tax year.

• **Tax Section 25C: Nonbusiness Energy Property Credit** Provides a tax credit to homeowners equal to 30% of installation costs for the highest efficiency tier products, up to a maximum of $600 for qualified air conditioners and furnaces and a maximum of $2,000 for qualified heat pumps.

• **Tax Section 25D: Residential Energy Efficient Property** Provides a tax credit to homeowners equal to 30% of installation costs for ENERGY STAR® geothermal heat pumps until 2032 (26% in 2033, 22% in 2034).

• **Tax Section 45L: New Energy Efficient Home Credit** Tax credits to builders for ENERGY STAR 3.1 homes: $2,500 (single‐family) / $500 (multi‐family). For Zero Energy Ready: $5,000 / $1,000 (rising to $2,500 / $5,000 with prevailing wage).

• **Tax Section 179D: Commercial Buildings Energy‐Efficiency Tax Deduction** Deduction for building owners installing qualifying systems, up to $14,000 total.

• **High-Efficiency Electric Home Rebate Program** (LMI homeowners): – Up to $8,000 for all-electric heat pumps – Up to $4,000 for electrical load center – Up to $2,500 for electric wiring

• **HOMES Rebate** Rebates for energy efficiency upgrades that improve a single‐family home’s or multi-family building’s overall performance.

No.

The Consortium for Energy Efficiency (CEE) is a non-profit of U.S. & Canadian energy efficiency administrators. CEE harmonizes programs across North America, supporting energy-efficient equipment, guidance, and customer programs.

See CEE’s equipment specs here (IRS is expected to require eligibility at the highest tier below “Advanced”):

• https://cee1.force.com/s/resources?id=a0V2R00000sUQbyUAG • https://cee1.force.com/s/resources?id=a0V2R00000sUQcXUAW

No.

Low-to-Moderate Income (LMI) is based on Area Median Income (AMI), set at state/city/county levels.

If both units meet criteria, each can be claimed. Consult your tax professional for details.

No lifetime cap, but program expires in 2032.

Federal rebates cannot be combined with any other federally funded IRA rebate. Non-IRA state or local programs may differ—check your state’s rules.

2022 installations under 2022 criteria file in the 2023 tax year. 2023 installations file in 2024, meeting 2023 criteria.

• Research tax credits & efficiency requirements • Communicate incentives in every sales presentation • Reach out to customers with qualifying systems installed Jan 1 2022–Dec 31 2022—they may qualify!