If you’ve been considering a heating and cooling upgrade to your home and are looking at heat pumps, we’ve got great news! The Inflation Reduction Act (IRA) offers significant tax credits and rebates that can help you make the upgrades to lower your carbon footprint and make your home more energy efficient.
These IRA incentives will help Salt Lake City homeowners:
• save money on monthly energy bills
• receive huge rebates and tax incentives
• have a cleaner, healthier indoor air environment
By replacing old, outdated, and inefficient heating and cooling systems and equipment, homeowners in Salt Lake City can reduce the energy they are using and save money in the long run. And now the IRA makes it more affordable!
Get pumped for heat pump and HVAC savings
A heat pump offers significant savings over a furnace/air conditioner combination system. Heat pumps can save the average American homeowner around $10,000 over 15 years. The savings are closer to $15,000 over 15 years if your home currently uses electric heat such as baseboard, an electric furnace, propane, or fuel oil.
For more immediate savings, you should take a look at the tax credits offered through the IRA. Tax credits went into effect January 1, 2023 and rebates will be available for equipment and installation purchases later in the year.
Here are the tax credits that you may qualify for:
When you install a heat pump in your home you are essentially replacing and upgrading two systems—your furnace and your air conditioner. Heat pumps are extremely energy efficient compared to the traditional natural gas furnace and air conditioners most homes are using today. A heat pump system has some advantages over other types of heating and cooling systems.
• Because it is one unit that provides both warm and cool air, it not only saves on having to purchase and maintain two units, but also takes up less space since it is one unit doing both jobs.
• Heat pumps are low-maintenance and only require a system check once a year. The check can be done by the homeowner, saving you money in the long run.
• Because no fossil fuels are used to run a heat pump, there are no fumes being released into the air. This carbon footprint reduction helps the environment. It also saves you money by removing natural gas (or propane or other fuel type) from your bills.
If you don’t go with a heat pump, the latest air conditioners can save you significant money on your energy bill, in addition to reducing carbon pollution. Ask the HVAC pros at Whipple Service Champions what they recommend for homeowners in Salt Lake City, Utah.
For some households, a heat pump doesn’t make sense for the structure of the home or the environment. An energy efficient furnace may make more sense in this situation. If you are in the market for a furnace upgrade, you can save up to $600 with the tax credits included in the Inflation Reduction Act.
Inflation Reduction Act Heat Pump and HVAC 25C Tax Credits in 2023
Energy Efficiency Home Improvement 25C Tax Credit
The IRA expanded and extended some existing tax credit and deduction programs. One of the biggest is the 25C tax credit, also called the Energy Efficiency Home Improvement Tax Credit. The 25C tax credit has been increased to cover 30% of the total cost of new energy efficient qualified systems for 2023. The 25C tax credit went into effect on January 1, 2023 for all homeowners.
As a homeowner in Salt Lake City, scheduling a heat pump installation or HVAC upgrade with Whipple Service Champions in 2023 means you will be able to deduct 30% of your total costs, with a total cap of $3,200 in tax credits, up to a maximum of $2,000 for a heat pump, when filing your taxes.
Home Owner Managing Energy Savings (HOMES) Whole House Rebates (The HOMES Rebate Program)
The 25C program isn’t the only new incentive from the Inflation Reduction Act. Another program that will become available later in 2023 is known as the HOMES rebate. This is a whole-home, performance-based rebate, meaning that the more energy you save by making upgrades, the more money you get back.
Everyone in Salt Lake City qualifies for the HOMES Rebate, but low- and medium-income households can get more back. This program provides rebates based on the percentage of energy savings. This program is capped at $8,000 for low to middle income households earning less than 80% of area median income who cut energy use by 35%.
NOTE: The HOMES rebate cannot be combined with the HEEHRA Rebates, but can be combined with the Inflation Reduction Act tax credits.
High-Efficiency Electric Home Rebate Act (HEEHRA)
Another provision of the Inflation Reduction Act that can be used for installing a heat pump and other HVAC upgrades is the High-Efficiency Electric Home Rebate Act (HEEHRA). This offers as much as $14,000 per year in point-of-sale discounts (not tax deductions) for electrical projects. These are discounts when the purchase is made.
These discounts are capped at 50% of qualifying costs for a household that makes between 80% and 150% of area median income. If your household makes below that threshold in income, HEEHRA covers 100% of qualifying costs up to $14,000.
While the IRA specifically prohibits combining other rebates (the HOMES Rebate and the HEEHRA rebate cannot be combined), you are allowed to claim HEEHRA rebates and tax credits.
Like the HOMES Rebate program, funds for the HEEHRA will become available later in 2023. The exact timeline and date are not known yet and is dependent on Department of Energy guidelines and state implementation. It is up to individual states to determine if HEEHRA rebates will be retroactive. Low-income households will receive larger and more accessible up-front discounts from HEEHRA than the HOMES rebate.
Get answers to all your heat pump, HVAC, and Inflation Reduction Act (IRA) questions at Whipple Service Champions
Our experts are trusted and know the ins and out of the IRA rebates and tax incentives that will apply to your situation. The IRA rebates and incentives apply to heat pumps to heat and cool your house, HVAC upgrades, and many other energy efficient home upgrades. Let Whipple Service Champions help you choose the right system for your home and work with you on what IRA tax rebates apply.
Read more about how the Inflation Reduction Act can save you money on electrical and plumbing upgrades in Salt Lake City.
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