Federal Tax Credits & Rebates for High-Efficiency Heat PumpsTest
The Inflation Reduction Act (IRA) is the largest clean energy investment program that the U.S. government has ever created. The details of the program are still being worked out, but homeowners will be able to take advantage of incentives to make the transition to clean energy easier and financially attractive. These home energy programs include upfront discounts and tax credits for every household in exchange for making updates to your home, including installing a high-efficiency heat pump.
In fact, in 2023, many American households will be eligible for a new heat pump at little or no cost to more efficiently cool and heat their home. But before we discuss how to take advantage of federal heat pump rebates, let’s go over the basics.
What’s a heat pump?
A heat pump is an appliance that warms and cools your home. It’s a more energy-efficient alternative to a traditional furnace or air conditioner. In the warmer months, a heat pump pulls heat from the inside of your home and moves it outside. In the colder months, it does the opposite, collecting heat from the outdoor air and moving it indoors. This efficiency is part of the reason why the federal government is offering heat pump tax credits and rebates.
Historically, heat pumps have been most popular in the southern states such as North Carolina and South Carolina, for example, where more than 40% of homes have heat pumps. The reason being that older heat pump models could not heat well in frigid temperatures, so they were generally less popular in colder areas of the country. But new advanced technologies enable modern heat pumps to operate effectively in temperatures of -10℉ and below.
The Bosch all-weather heat pump, for example, uses variable compressor speed and other technologies to work at very cold temperatures. Paired with an existing oil furnace, a Bosch all-weather heat pump can reduce a typical Delaware home’s oil consumption by up to 75%!
Why heat pumps?
Part of the IRA funds the development of renewable energy sources, including solar, wind, and hydro. Energy created by these sources produce no carbon emissions, so it’s considered “clean.”
The government seeks to ultimately move away from energy sources that burn fossil fuels, including gas, towards electricity sources. The first step in that direction is for homeowners to upgrade to energy-efficient electric appliances.
Besides the enhanced energy efficiency, heat pumps have several advantages over traditional heating equipment, like a furnace. One of the biggest benefits is that buying one could net you hefty savings, thanks to the IRA.
What is the HEEHRA?
The High Efficiency Electric Home Rebate Act (HEEHRA) is the official name of the IRA’s heat pump incentive program. It offers point-of-sale rebates on any heat pump for home heating and cooling up to $8,000. “Point-of-sale” means the rebate amount is automatically deducted from the price at the time of sale – no need to send in for a refund.
HEEHRA federal heat pump rebates will be available for low- and moderate-income households. The amount of each rebate will depend on your household income and the heat pump you choose.
Inflation Reduction Act heat pump rebate
If your household income is 80% below your area’s median income, you receive the maximum rebate, covering your new heat pump at 100% up to $8,000. If your household income is 81-150% of your area’s median income, you’ll receive up to 50% of the heat pump’s cost. To look up your area’s median income, use this tool from Fannie Mae.
You’re not out of luck if your household income exceeds 150% of your area’s median income. These homeowners receive a 30% tax credit of up to $2,000 on new qualifying heat pumps. (More on this in another blog post.)
How to get a heat pump rebate
Information about how to get a high-efficiency heat pump rebate or tax credit isn’t yet available because the government is working out the details. What we do know is that the State of Delaware will disburse the HEEHRA rebates in our area. Neighboring states like Maryland and Pennsylvania will run the program in their area. The DOE will likely issue state guidelines in spring 2023. Funding should be available to each state beginning in spring 2023 with rebates available to consumers later in the year.
Call us now to learn more about heat pump tax credits and rebates
As you can see this is complicated, but it is our job to keep you informed. As more information becomes available, count on us to translate it into big savings for your household. Our Burns & McBride team in Wilmington, DE, would be happy to share other HVAC options with you. Call our experienced professionals at 302-273-1341 or request service online today.