Regardless of the home improvement project you embark on, it is safe to assume that you will incur some hefty costs. Materials and services, after all, are not getting any cheaper. In fact, in the last couple of years, prices have been rising steadily due to the new inflation that the American economy has been experiencing.
To combat the merciless prices of inflation, our legislators have graciously decided to meet us halfway by implementing policies to reduce the rate of these price increases. In this article, we will tell you all we know about the Inflation Reduction Act of 2022 and how it can benefit you as you upgrade your air conditioning unit or furnace.
What does the Inflation Reduction Act Mean for Me?
The implementation of this law affects all individuals and businesses. Part of this law is designed to reduce carbon emissions by incentivizing individuals to use energy-efficient products like electric cars, solar power, and home appliances like ACs. These incentives are offered through a variety of tax credits or rebates that are available to those who made environmentally friendly upgrades in their homes. Check out the rebates and tax credits that you can take advantage of below:
Internal Revenue Code Section 25C – 2022
If you made energy-efficiency home improvements through December 31, 2022, you may qualify to claim a credit against your tax credit for the purchase of the following energy-efficient equipment:
- Advanced main air circulating fan
- Natural gas, propane, oil furnace, or boiler
- Split system air conditioner or heat pump
- Package air conditioner, heat pump, gas/electric
The maximum credit available for these upgrades ranges from $50-$300, depending on the product and its efficiency rates.
Internal Revenue Code Section 25C – 2023
Beyond the tax credit provisions made for upgrades that took place in 2022, the government also provides a set of nonrefundable tax credits options for any new projects that homeowners plan in 2023 through 2032. Here’s what you can expect if you choose to install an AC this year:
- 30% tax credit of the total installation costs for eligible equipment, or up to $1,200 maximum for the taxable year
- If you install a heat pump, you may be eligible for a $2,000 tax credit separate from the $1,200 annual limit for AC installations
These credits extend towards covering the cost of labor, equipment, and other qualifying upgrades that make the home more energy efficient. There is however a cap for the allowable credits:
- $600 maximum for central air conditioners and furnaces
- $2,000 for heat pumps
For detailed information, consult your tax professional or the financial representative of the AC service you choose for your installation.
High-Efficiency Electric Home Rebate Program (HEEHRP)
In addition to the tax credits, the U.S. Government also provided funding to the HEEHRP. This is a program that is designed for households whose income falls below a certain threshold to make energy-efficient upgrades in their home. Here are the rebates you may qualify for based on your income, should you decide to upgrade your air conditioning system this year:
- If your household income is 80% of the local median income: May qualify for a 100% rebate on your air conditioning unit purchase.
- Households that fall between 80% to 150% of the local median income: May qualify for a 50% rebate on the system purchase price
- If household income is above 150% of the local median income: Will not qualify for any rebates
The maximum rebate available is $14,000 total for HVAC installations. This program will be offered as long as the funds are still available.
That Being Said…
If you’ve been contemplating replacing your air conditioning unit in your home, there has never been a better time to do so than now! Whether you take advantage of the generous rebate program or the tax credit, you can save significantly on your new unit. Thus, do not put off the installation project any further because funds will run out!
Contact Air Force Heating and Air to Learn More About the 2023 Tax Credits!
Are you ready to take advantage of the tax credits and rebate options? Contact us today to learn about the options available to you and how you can use them to save on invaluable, energy-efficient upgrades. Lessen your carbon footprint and enhance your home environment by making those upgrades today.