Inflation Reduction Act

TAKING ADVANTAGE OF THE INFLATION REDUCTION ACT TAX CREDITS: PATIENCE PAYS OFF

North Carolina Inflation Reduction Act Information

Here’s why Raleigh, NC, property owners should care about the Inflation Reduction Act of 2022.

It’s an opportunity.

Signed into law in August 2022, the Inflation Reduction Act provides tax credits and rebates to encourage North Carolina homeowners to replace older appliances with high-efficiency equipment that does a better job at a lower operating cost.

How to Take Advantage of the Inflation Reduction Act

Services Unlimited Heating & Air, Inc. can help pinpoint areas in your home or business where you can save money and reduce your carbon footprint, allowing you to use the best tax credits and rebates.

HVAC Tax Credits Homeowners Can Claim

The Inflation Reduction Act extends and expands the existing Energy Efficient Home Improvement Credit (Section 25C) and the Residential Clean Energy Credit (Section 25D) to homeowners.

Projects installed between 2023 and 2032 quality for a 30 percent tax credit:

 

Air Conditioners—Tax credit capped at $600

Heat Pumps—Tax credit capped at $2,000

Furnaces and Boilers—Tax credit capped at $600

Geothermal Systems—Uncapped 30 percent tax credit on purchase and installation

Solar Paneling—Uncapped 30 percent tax credit on purchase and installation

 

If you installed rooftop solar in 2022, it is eligible for the new 30 percent 25D tax credit. If you installed a heat pump in 2022, it is eligible for the old 25C tax credit, or 10 percent of costs up to $300.

 

Here is a closer look at heating, ventilation, and air conditioning (HVAC) products and eligibility requirements:

 

• All ducted air-source heat pumps with the ENERGY STAR® label qualify.

• Split air conditioner systems must have a Seasonal Energy Efficiency Rating 2 (SEER2) of 16 or more. All packaged systems with ENERGY STAR certification are eligible.

• Gas furnaces must have an annual fuel utilization efficiency (AFUE) rating of at least 97 percent.

• Gas boilers with an AFUE of at least 95 percent qualify.

• Oil-fueled boilers and furnaces must be capable of using fuel blends.

 

HVAC Rebates

The Inflation Reduction Act set aside a $4.3 billion budget, with the money allocated to individual states for disbursement. Funding will vary from state to state, and eligibility is income based.

For example, the High-Efficiency Electric Home Rebate Act (HEEHRA) covers 100 percent of electrification project costs (up to $14,000) for low-income households and 50 percent of costs (up to $14,000) for moderate-income households.

Heres how some of those rebates would work:

• $8,000 for a heat pump for space heating

• $4,000 for an upgraded breaker box

• $2,500 for upgraded electric wiring

• $1,750 for a heat pump water heater

• $1,600 for insulation, air sealing, and ventilation

• $840 for an electric stove, cooktop range, or oven

• $840 for an electric clothes dryer

The rebate program is not available to all households. Because the funds are being allocated to state offices, and each state gets to decide to a certain degree how to distribute the money, it will take some time to implement the rebate program. Nor are the rebates retroactive to 2022.

The tax credits, in contrast, are in place right now and will continue to be for the next decade.

 

Buy Now and Save

Up-front costs are typically the biggest obstacle to upgrading your heating and cooling system. The Inflation Reduction Act of 2022 overcomes that barrier. Call  Services Unlimited Heating & Air, Inc. today or request service online to learn more about how to save money.

The Inflation Reduction Act of 2022 both extends and expands existing 25C and 25D tax credits to homeowners and 45L tax credits to home builders for installing applicable high-efficiency HVAC equipment. Each of these credits has specific efficiency requirements to qualify as outlined in the chart below. The bill applies to systems installed in 2022, and some of these credits will increase in 2023.

Here is a summary of the tax credits as they stand now, and for the coming years:

Tax Section

25C

2022 Tax Credit Details

10% of cost up to $500
Air Conditioners
- Up to $300 tax credit
Heat Pumps
- Up to $300 tax credit
Gas Furnaces and Boilers
- Up to $150 tax credit
Advanced Main Air Circulating Fan
- Must use no more than 2% of furnace's
total energy, up to $50 tax credit

2023-2032 Tax Credit Details

30% of cost up to $1,200 ($2,000 for Heat Pump)
Products must be in the highest efficiency CEE tier
Air Conditioners
- Up to $600 tax credit
Heat Pumps
-Up to $2,000 tax credit
Gas Furnaces and Boilers
- Up to $600 tax credit
Advanced Main Air Circulating Fan
- Must use no more than 2% of furnace's
total energy, up to $50 tax credit

Tax Section

25D

2022-2034 Tax Credit Details

Geothermal Heat Pumps
- 30% for systems placed in service
during calendar year 2022 through
calendar year 2032
- 26% for systems placed in service
during calendar year 2033
- 22% for systems placed in service
during calendar year 2034

Tax Section

45L

2022-2032 Tax Credit Details

Single Family
- Single Family New homes -
$2,500 tax credit
- Zero-energy Single Family New
Homes - $5,000 tax credit
Multifamily
- Multifamily Units - $500 tax credit
- Zero-energy Multifamily Units
- $1,000 tax credit

Need HVAC Service?

Contact the experts at Services Unlimited Heating & Air.

Call us at (919) 875-2114!