Energy Efficient Home Improvement Credit
Click here to learn more about qualifying expenditures and credit amounts for home owners and business owners.
Inflation Reduction Act
Among several other goals, the 2022 Inflation Reduction Act aims to help reduce everyday living costs for homeowners across the United States. The initiative features a variety of valuable energy efficiency incentives, but what can you do to get in on the action?
Energy Efficient Home Improvement Credit
Initially scheduled to expire in 2022, the Energy Efficient Home Improvement Tax Credit has instead been revived and extended. Under the Inflation Reduction Act, this incentive — also known as the 25C program — will remain active through 2032. To eliminate any eligibility gaps, the extension was also made retroactive to January 1, 2022.
The popular 25C program provides substantial tax credits to households that install certain high-efficiency equipment. This includes up to $600 for qualifying air conditioners and gas furnaces, with an annual cap of $1,200 per household. The yearly cap even increases to $2,000 when you install a qualifying heat pump, boiler, or heat pump water heater. However, the program’s stringent efficiency standards can significantly limit your options.
High-Efficiency Electric Home Rebate Program
If you’ve ever considered purchasing a heat pump for your home, now may be the perfect time to strike. The Inflation Reduction Act has appropriated $4.5 billion to fund the High-Efficiency Electric Home Rebate Program (HEEHRP). This program provides tremendous incentives to homeowners who install Energy Star-certified heat pumps.
If your household falls below 80% of the median local income, you may be able to recoup the entire cost of your system. Households that fall between 80% and 150% of the median income can still receive a 50% rebate through the HEEHRP. The program can also provide additional rebates to help upgrade your home’s wiring, electrical service panel, and insulation.
Home Owner Managing Energy Savings Program
Despite its clunky name, the Home Owner Managing Energy Savings (HOMES) Program promises to deliver serious savings for savvy homeowners. The program includes rebates covering a broad range of retrofits and home improvements that reduce household energy consumption. This includes heating and cooling systems, water heaters, insulation, air, and duct sealing, home energy audits, and more.
To qualify for rebates up to $2,000, your improvements must demonstrate energy savings of at least 20%. Saving more energy will earn you a larger rebate, up to a maximum of $8,000, for a 50% reduction in energy consumption. Be aware, however, that these rebates cannot be combined with other federal efficiency incentives.
The bottom line is that the Inflation Reduction Act has made investing in energy-efficient equipment incredibly appealing for homeowners. If you’re tired of paying high energy bills, talk to your local HVAC contractor about how rebates and incentives can help you save now and in the future.
The U.S. Department of Energy is about to enforce new SEER standards for HVAC systems, but what does that mean for you? To make sense of it all, let’s break down exactly what’s changing and what effects you can expect to see.
How SEER Measures Energy Efficiency
It might sound straightforward, but measuring the efficiency of air conditioners and air-source heat pumps is surprisingly complicated. Among other issues, system performance may vary considerably depending on the weather conditions at any given time. Think of it like measuring the fuel economy of a vehicle on a wide-open highway versus sitting in rush hour traffic.
To solve this problem, Seasonal Energy Efficiency Ratio (SEER) calculates a system’s performance across an entire season. This produces a single number that serves as a simple, convenient reference for comparing the efficiency of different units. In essence, a higher SEER rating means less energy used and less money spent on cooling.
Demystifying the New SEER2 Mandates
For decades, the Department of Energy has enforced minimum efficiency standards for all new cooling systems. Heat pumps and AC systems in the North require a SEER rating of at least 13. In the South and Southwest, the current standard is 14 SEER. However, as of January 1, 2023, these minimum standards will increase by one for most systems.
This update is part of a broader “SEER2” initiative that features new testing procedures. The new SEER2 protocols are designed to better reflect real-world conditions, thus producing more accurate efficiency data. On average, a current rating of 14 SEER will compare to a SEER2 rating of approximately 13.4.
What This All Means for Homeowners
Since prices typically increase in line with efficiency, it will likely cost more to install new HVAC systems beginning in January. However, you won’t be required to replace existing equipment that falls below the new SEER2 standards. In addition, any added equipment costs may be offset over time by the resulting savings on energy bills.
Another key change coming in 2023 is the phase-out of R-410A refrigerant. This refrigerant will no longer be used in newer models but is still common in many current air conditioning units. Once again, the good news is that existing systems need not be replaced to comply with the new regulations. Nonetheless, if you currently have an R-410A system, it may be time to start planning for an eventual equipment upgrade.
The 2023 SEER2 mandates mark an important shift in the HVAC industry, but homeowners have no cause for alarm. While the cost of new AC and heat pump systems may increase, the corresponding jump in efficiency should be great news for all.