IRA 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. That percentage drops to 26% in 2033 and 22% in 2034.
• Tax Section 45L: New Energy Efficient Home Credit
  Provides tax credits to builders for meeting specific energy-saving criteria. The tax credits for ENERGY STAR 3.1 certified housing are $2,500 for single-family homes and $500 for multi-family units. To meet the Department of Energy’s Zero Energy Ready requirements, the tax credit increases to $5,000 for single-family and $1,000 for multi-family residences. If prevailing wage requirements are met on multi-family construction, those credits increase to $2,500 and $5,000
• Tax Section 179D: Commercial Buildings Energy-Efficiency Tax Deduction
  Provides a tax deduction for building owners to claim for installing qualifying systems in buildings.
  Up to $14,000 maximum for all.

• High-Efficiency Electric Home Rebate Program
  Provides income-depending rebates to low to moderate-income (LMI) homeowners, including:
  • Up to $8,000 for all-electric heat pumps
  • Up to $4,000 for electrical load service center
  • Up to $2,500 for electric wiring
• HOMES Rebate
• Provides rebates for energy efficiency upgrades that improve a single-family homes or multi-family building’s overall energy performance.

Research the potential tax credits available, the efficiency requirements to earn the credit and the products that meet those criteria. Then, communicate those potential incentives in every sales presentation.

No.

CEE

What is CEE?

The Consortium for Energy Efficiency (CEE) is an award-winning non-profit comprised of U.S. and Canadian energy efficiency administrators working together to accelerate the development and availability of energy-efficient products and services. CEE harmonizes program approaches in North America by supporting the production and market adoption of energy-efficient and connected equipment, installation and maintenance guidance, and facilitating program opportunities for each unique customer.

The CEE equipment specifications for air conditioners, heat pumps and furnaces can be found at the following links. Currently, the direction is that the IRS will require eligibility for 25C to adhere to the highest tier below the Advanced tier for each product. It is still unclear whether the IRS will include regional distinctions, North versus South.

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

The highest tier refers to the tier below the “Advanced Tier” with “Tier 1” being the lowest tier if there are multiple tiers listed.

No.

Only M1-rated equipment is applicable.

LMI

What is LMI?

Low-to-Moderate Income (LMI) based on the area median income (AMI).

LMI is determined at the various levels (state, city, county level). Please refer to your local municipal office for information about your area.

LMI is determined at various levels (state, city, county level). Please refer to your local municipal office for information about your area.

Please refer to the TM Webinar Deck for a breakdown of the income levels required for rebate qualification.

The performance requirements for Energy Star and cold climate heat pumps can be found here.

25C

Our understanding is that if both units meet the criteria, both items can be claimed. Please consult with your tax professional for more information.

25C does not have a lifetime cap, but the program expires in 2032.

25C is a federal tax credit. The rebate programs, though funded at the Federal level, are administered at the state level, and are funded separately from the IRA in the amount of $4.3 billion for both rebates.

There is no lifetime cap, but there is an annual cap of $1,200 for qualifying products and a separate annual cap of $2,000 for heat pumps. If combining a heat pump with other qualifying products, a homeowner could receive up to $3,200. Please consult your tax professional for more information.