You probably have an opinion (probably a strong one) about the Inflation Reduction Act (IRA) that was signed into law last summer. Intended to curb inflation and reduce carbon emissions, among other provisions, the IRA includes tax credits for energy-efficient home improvements that any homeowner can take advantage of between now and the end of 2032.
The Act’s Energy Efficient Home Improvement Tax Credit (25C) increases the tax credit limit homeowners can receive for installing qualifying high-efficiency HVAC systems, including furnaces, air-conditioning units, heat pumps, and fans. Bottom line: you get a tax break for improving the efficiency of your home, saving you money every year, and contributing to a cleaner world.
Here are a few FAQs to help you understand it a little better.
How much can I save?
The IRA’s 25C tax credit is equal to 30 percent of the cost for all eligible home improvements made from January 1, 2023, to December 31, 2032. There is an annual cap of $1,200 (including up to $600 for a qualified AC unit or gas furnace), or up to $2,000 on a qualified heat pump, heat pump water heater, or boiler. The new law also provides rebates of up to $14,000 for equipment and certain efficiency-upgrade expenses.
Is this a one-time credit? What about an income restriction?
No. You can earn the credit every year between now and 2032, as long as you’re purchasing qualifying energy-efficient equipment and/or non-HVAC items such as energy-efficient windows and doors. And there are no income requirements for this tax credit.
What if I made a qualifying improvement in 2022?
If you had eligible HVAC equipment installed or made other energy-efficient home improvements on or after January 1, 2022, then you may qualify for a retroactive tax credit of 10 percent of the costs of installing qualified equipment. Talk to your tax advisor about how you can take advantage of this credit.
The Inflation Reduction Act is the largest piece of federal legislation ever to address climate change. It encourages homeowners to make energy-efficient improvements, thereby decreasing their energy consumption.
With these financial incentives, now is a good time to replace your old HVAC system or those drafty old windows and doors. Your True Blue heating and air conditioning professionals offer Trane residential heating and cooling systems that qualify for this 25C tax credit. Contact us today to learn more about tax credits, rebates, and other ways True Blue can help you save money with energy-efficient products, HVAC preventive maintenance plans, and more.