How the Inflation Reduction Act Rewards Homeowners Who Make Energy-Efficient HVAC Upgrades
In a typical home, the heating and air conditioning systems account for more than 50% of household energy consumption. So when it comes to reducing energy costs and making the home more eco-friendly, the HVAC system is the best place to start. And since HVAC technology is always improving, many of today’s systems are vastly more efficient than the older units many people have – but an upgrade may not fit into every homeowner’s budget.
That’s where the Inflation Reduction Act comes in. This bill, which goes into effect in 2023, will make it more affordable than ever to upgrade to a more energy-efficient HVAC system – for some households, it may even be free! So this article will break down what the bill entails, the incentives it offers, and some additional advantages of installing a high-efficiency HVAC system.
The Inflation Reduction Act Explained
The Inflation Reduction Act – or IRA for short – is a sweeping legislative initiative intended to cool inflation, curb climate change, and encourage investments in clean energy. The bill includes programs that offer tax credits and rebates for certain energy-efficient home improvements. Some such incentives already exist in many states (such as tax credits for installing solar panels). Still, the IRA extends and expands on these to provide a broader range of subsidies to even more households.
Some of these incentives include rebates and tax credits for upgrading insulation, installing weather-proof windows, updating electrical panels, and replacing old appliances such as stoves and water heaters with high-efficiency models.
But one of the biggest incentives is given to those who replace their existing HVAC systems with an energy-efficient heat pump. Households with average or above-average incomes (relative to the median household income in their area) can potentially save thousands of dollars on a new heat pump system, while lower-income households can potentially get 100% of the cost covered.
Requirements for New HVAC Systems
The new HVAC systems must meet certain requirements to qualify for incentives included in the IRA. Traditional central heaters and air conditioners will have to be in the top efficiency tier defined by the Consortium for Energy Efficiency (CEE). However, the incentives for installing these systems are relatively modest, capping off at $600 in tax credits per household.
The incentives for heat pumps are much more attractive, mostly because heat pumps are much more efficient in general than other types of HVAC systems and the authors of the IRA want to encourage homeowners to invest in them. Low-income and average-income households can qualify for a 100% or 50% rebate on a new heat pump, respectively (with a cap of $8,000) – provided that the heat pump meets the Department of Energy’s minimum efficiency standard. High-income households can get a tax credit for 30% of the cost of a new heat pump (up to $2,000) – but in this case, the heat pump must be in the CEE’s top efficiency tier.
It’s also important to note that these incentives are not retroactive – they only apply to systems installed in 2023. If homeowners want help determining what kind of system to install to take full advantage of these incentives, they will do well to consult with their trusted local HVAC company.
More Advantages of Upgrading the HVAC System
Because HVAC systems are required to meet certain efficiency standards to qualify for the tax credits and rebates provided by the IRA, homeowners who upgrade will also enjoy lower energy bills every month. Those who switch to heat pumps may also find spending less on maintenance and repairs over time since a heat pump is essentially a heater and air conditioner all rolled into one system.
But regardless of the type, installing a new HVAC system can help improve the air quality and overall comfort of the home thanks to the constant improvements and innovations in HVAC technology. And by combining this with the IRA’s many other incentives for improving the home’s energy efficiency, homeowners can enjoy amazing savings and comfort for many years to come!
About Albers Air Conditioning
Albers Air Conditioning has proudly served the Slidell community since 1989. Their punctual and courteous technicians are insured, NATE-certified, drug-tested, and background-checked for every customer’s safety and peace of mind. They offer up-front pricing, financing, same-day service, and a money-saving membership plan. They also guarantee 100% satisfaction on every job, so homeowners know they’re in good hands when they call Albers for heat pump installation in Slidell, LA!