Inflation Reduction Act
Here’s why Portsmouth, RI, 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 Rhode Island 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
Ocean State Air Solutions 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.
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.
Here’s 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 Ocean State Air Solutions today or request service online to learn more about how to save money.