With the passing of the Inflation Reduction Act of 2022, homeowners have new opportunities to receive tax credits and rebates for purchasing high-efficiency products. Below, we outline the key information regarding gas furnaces, air conditioning units, and heat pumps.
Important Disclaimer: We are not tax advisors and do not provide any guarantees or assurances regarding the eligibility of specific equipment for tax credits or rebates. This information is provided for informational purposes only and should not be considered tax advice. The IRS is responsible for the implementation and administration of tax credits. Homeowners must meet specific requirements and limitations to qualify for these credits. Tax laws are subject to change, so we strongly recommend consulting with a tax advisor to determine your eligibility and to review applicable tax laws and regulations. We disclaim all liability for any damages arising from a homeowner's claim for a tax credit or rebate. This information may change without notice.
2023 Tax Credits
Energy Efficiency Home Improvement Tax Credit (25C)
As part of the Inflation Reduction Act of 2022, homeowners can take advantage of tax credits when purchasing high-efficiency products. The following table outlines the 25C Tax Credit Requirements for 2023:
| Product Type | Tax Credit Amount | Region | AFUE | SEER2 | EER2 | HSPF2 | COP (5⁰F) |
|---|---|---|---|---|---|---|---|
| Gas Furnace | $600 | ALL | ≥ 97% | N/A | N/A | N/A | N/A |
| Gas Boilers | $600 | ALL | ≥ 95% | N/A | N/A | N/A | N/A |
| Air Conditioner | $600 | ALL | N/A | ≥ 16.0 | ≥ 12.0 | N/A | N/A |
| Heat Pump (ducted) | $2,000 | S & SW | N/A | ≥ 15.2 | ≥ 11.7 | ≥ 7.8 | N/A |
| $2,000 | North | N/A | ≥ 15.2 | ≥ 10.0 | ≥ 8.1 | 1.75 | |
| Heat Pump (ductless) | $2,000 | S & SW | N/A | ≥ 16.0 | ≥ 12.0 | ≥ 9.0 | N/A |
| $2,000 | North | N/A | ≥ 16.0 | ≥ 9.0 | ≥ 9.5 | 1.75 | |
| RPU – AC | $600 | ALL | N/A | ≥ 15.2 | ≥ 11.5 | N/A | N/A |
| RPU – HP | $2,000 | S & SW | N/A | ≥ 15.2 | ≥ 10.6 | ≥ 7.2 | N/A |
| $2,000 | North | N/A | ≥ 15.2 | ≥ 10.0 | ≥ 8.1 | 1.75 |
High Efficiency Electric Home Rebate Act (HEEHRA)
The Inflation Reduction Act of 2022 also includes the High Efficiency Electric Home Rebate Act (HEEHRA), which provides rebates for homeowners who enhance the efficiency of their homes. Homeowners can receive up to $14,000 in rebates, with specific amounts allocated for different upgrades:
- Up to $8,000 for installing a heat pump system.
- Up to $4,000 for electrical panel upgrades.
- Up to $2,500 for wiring.
- Up to $1,600 for insulation and sealing.
Eligibility Criteria:
- Equipment must meet the Proposed Energy Star 6.1 Rating (15.2 SEER2 / 11.7 EER2 / 7.8 HSPF2).
- Rebates are income-based, depending on the Median Household Income for your area:
- 80% or less of the median income could qualify for 100% of job costs up to $8,000.
- 81%-150% of the median income could qualify for 50% of job costs up to $4,000.
Example: If the median household income in your area is $100,000:
- If your household earns $80,000 or less, you could qualify for up to $8,000 in rebates.
- If your household earns between $80,500 and $150,000, you could qualify for up to $4,000 in rebates.
Note: Information on how to obtain a heat pump rebate through the HEEHRA is not yet available. State governments will be responsible for executing the program rebates, with guidelines expected to be available in Spring 2023.
For more detailed information and to ensure you qualify, please consult with a tax advisor and refer to IRS Form 5695 available at www.irs.gov/Form5695.