Inflation Reduction Act – Frequently Asked Questions

Please note that information is still forthcoming and evolving. There are several unknowns at the state level, and changes are inevitable.

To help reduce inflation, decrease carbon emissions, and more, the U.S. Government has passed the Inflation Reduction Act (IRA), which includes several tax credits for installing ENERGY STAR® certified home heating and cooling products. The IRA consists of rebates and tax credits for HVAC.

There are two rebate programs available. Rebates are administered at the state level and favor lower-income households. Federally funded rebates cannot be combined and are intended for immediate, point-of-sale benefit.

There are four tax credits available. Tax credits are federal income tax credits available to anyone with taxable income. Tax credits can be combined, and rebates can be filed for the following calendar/tax year.

Tax Section 25C: Nonbusiness Energy Property Credit

  • Provides a tax credit to homeowners equal to 30% of installation costs for the highest efficiency tier products, up to a maximum of $600 for qualified air conditioners and furnaces and a maximum of $2,000 for qualified heat pumps.

Tax section 25D: Residential Energy Efficient Property

  • Provides a tax credit to homeowners equal to 30% of installation costs for ENERGY STAR® geothermal heat pumps until 2032. That percentage drops to 26% in 2033 and 22% in 2034.

Tax Section 45L: New Energy Efficient Home Credit

  • Provides tax credits to builders for meeting specific energy-saving criteria. The tax credits for ENERGY STAR 3.1 certified housing are $2,500 for single-family homes and $500 for multi-family units. To meet the Department of Energy’s Zero Energy Ready requirements, the tax credit increases to $5,000 for single-family and $1,000 for multi-family residences. If prevailing wage requirements are met on multi-family construction, those credits increase to $2,500 and $5,000

Tax Section 179D: Commercial Buildings Energy-Efficiency Tax Deduction

  • Provides a tax deduction for building owners to claim for installing qualifying systems in buildings.
  • Up to $14,000 maximum for all.

High-Efficiency Electric Home Rebate Program

  • Provides income-depending rebates to low to moderate-income (LMI) homeowners, including:
    • Up to $8,000 for all-electric heat pumps
    • Up to $4,000 for electrical load service center
    • Up to $2,500 for electric wiring

HOMES Rebate

  • Provides rebates for energy efficiency upgrades that improve a single-family homes or multi-family building’s overall energy performance.

Research the potential tax credits available, the efficiency requirements to earn the credit and the products that meet those criteria. Then, communicate those potential incentives in every sales presentation.

No.

CEE

The Consortium for Energy Efficiency (CEE) is an award-winning non-profit comprised of U.S. and Canadian energy efficiency administrators working together to accelerate the development and availability of energy-efficient products and services. CEE harmonizes program approaches in North America by supporting the production and market adoption of energy-efficient and connected equipment, installation and maintenance guidance, and facilitating program opportunities for each unique customer.

The CEE equipment specifications for air conditioners, heat pumps and furnaces can be found at the following links. Currently, the direction is that the IRS will require eligibility for 25C to adhere to the highest tier below the Advanced tier for each product. It is still unclear whether the IRS will include regional distinctions, North versus South.

https://cee1.my.site.com/s/resources?id=a0V2R00000sUQbyUAG
https://cee1.my.site.com/s/resources?id=a0V2R00000sUQcXUAW

The highest tier refers to the tier below the “Advanced Tier” with “Tier 1” being the lowest tier if there are multiple tiers listed.

No.

Only M1-rated equipment is applicable.

LMI

Low-to-Moderate Income (LMI) based on the area median income (AMI).

LMI is determined at the various levels (state, city, county level). Please refer to your local municipal office for information about your area.

LMI is determined at various levels (state, city, county level). Please refer to your local municipal office for information about your area.

Please refer to the TM Webinar Deck for a breakdown of the income levels required for rebate qualification.

The performance requirements for Energy Star and cold climate heat pumps can be found here.

25C

Our understanding is that if both units meet the criteria, both items can be claimed. Please consult with your tax professional for more information

25C does not have a lifetime cap, but the program expires in 2032.

We are not aware of the documentation that will be required for filing. Please consult your tax professional for more information.

25C is a federal tax credit. The rebate programs, though funded at the Federal level, are administered at the state level, and are funded separately from the IRA in the amount of $4.3 billion for both rebates.

There is no lifetime cap, but there is an annual cap of $1,200 for qualifying products and a separate annual cap of $2,000 for heat pumps. If combining a heat pump with other qualifying products, a homeowner could receive up to $3,200. Please consult your tax professional for more information.

QUALIFICATIONS

The IRS intends for a qualifying system. If the IRS requires an AHRI certification number, then a heat pump installed would have to be installed on a system combination that meets the requirements. However, we do not know what the IRS will require upon filing.

AHRI has not updated their site to match the 2023 tax requirements or the Energy Star 6.1 requirements.

All of the requirements for 2023 installations reference M1 ratings. There currently isn’t any direction regarding M-rated equipment.

Regardless of the number of systems, the taxpayer is limited by the annual limit. Replacement of one system would likely meet the annual limit so to maximize the tax benefit, they should subsequent systems in later years.

STATE REBATES / Point of Sale

Federal rebates cannot be combined with any other federally funded rebate program included in the IRA. We are unaware of any restrictions for other non-IRA programs.

We do not know this information at this time.

We do not know this information at this time; each state will determine this process.

We do not know this information at this time; each state will determine this process.

TIMING

No information on this is available at this time. This will be decided at state level.

2022 installations that qualified based on the 2022 criteria can be filed for tax credit in the 2023 tax year. Qualified installations occurring in 2023 need to meet the 2023 criteria and would be included in the household’s 2024 tax filings. Please consult your tax professional for more information.

Please consult your tax professional for more information regarding filing separate claims on multiple systems/homes owned by the consumer.

  1. Dealers should renew efforts in selling higher-efficiency systems by researching the potential tax credits available and the products that meet the efficiency requirements to earn the credit.
  2. Dealers should then communicate potential incentives in every sales presentation and, at the same time, consider reaching out to customers who installed qualifying systems between January 1, 2022, and December 31, 2022, and let them know they may qualify for the credit as well.

Air Conditioning

Our air conditioning services ensure optimal comfort in your home or workplace, no matter the season. With our experienced technicians, we offer efficient installation, maintenance, and repair services tailored to your specific needs. From diagnosing issues to implementing energy-saving solutions, we ensure your AC system runs smoothly and efficiently. Trust us to keep you cool and comfortable year-round with our reliable air conditioning services.

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Furnaces & Heating

Our heating services guarantee warmth and comfort throughout the chillier months. With skilled technicians at your service, we provide expert installation, maintenance, and repair for furnaces and heating systems. Whether it’s diagnosing inefficiencies or replacing outdated equipment, we ensure your home or business stays cozy and energy-efficient. Count on us to deliver reliable heating solutions tailored to your needs, keeping you snug during the coldest days.

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Plumbing Services

Our plumbing services offer comprehensive solutions to address all your plumbing needs. From fixing leaks and clogs to installing new fixtures, our experienced plumbers ensure efficient and reliable service. We prioritize prompt response times and quality workmanship to minimize disruptions to your home or business. Trust us to keep your plumbing systems running smoothly and your property protected from water damage.

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Electrical Services

Our electrical services provide expert solutions to address all your electrical needs. From wiring upgrades to troubleshooting electrical issues, our skilled electricians ensure safety and efficiency. We prioritize timely responses and meticulous attention to detail to guarantee your electrical systems operate reliably. Count on us to keep your home or business powered up and safe from electrical hazards.

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Air Quality Services

Our commitment to indoor air quality ensures healthier and more comfortable living environments for our clients. Through advanced technology and expertise, we offer comprehensive solutions to improve air purity and freshness in residential and commercial spaces alike. From air quality assessments to tailored purification systems, we prioritize the well-being of our customers by addressing allergens, pollutants, and contaminants effectively. Experience the difference in air quality with our dedicated services, providing peace of mind and promoting a healthier lifestyle for you and your loved ones.

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Commercial Services

We specialize in delivering exceptional commercial electrical, plumbing, and HVAC services tailored to meet the unique needs of businesses. With a team of highly skilled technicians, we ensure top-notch installations, repairs, and maintenance to keep your operations running smoothly. From complex electrical systems to intricate plumbing setups and efficient HVAC solutions, we guarantee reliable service that prioritizes safety and efficiency. Trust us to provide comprehensive solutions that exceed your expectations and contribute to the success of your commercial ventures.

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Customer Insights

Heater went out the other day and I finally called Temperature Control in Oro Valley. They sent out a senior tech Jeremy Oliver who was very knowledgeable and explained what’s was going on in laymen’s terms. He gave us multiple option on how to move forward and had us heating with in a few hours. I didn’t know they do plumbing and electrical too. Found my new one stop home repair company

I. Angelina

Reggie and Rick did an awesome job. Everything was done on time. They cleaned everything up really well after. Any questions asked were answered/shown. Highly recommend for plumbing!

S. Leteff

From proposal through install, Temperature Control was informative, provided excellent service and educated us on the new system. Anthony and Allen went above and beyond in providing us with a bid that included discounts applied, as well as additional ongoing services. The techs who installed our systems worked a long day, and welcomed our questions as well as educating us on system use. All involved were professional, of high quality and pleasant.

S. Wilson

We have used TempCon for 20 years and been very happy with the level of service and the technicians. Tyler has been coming out a little less than a year and he is superb. Competent, efficient and explains what he is doing and why. The best of the best! I highly recommend this company for all your HVAC needs.

B. Brown

Johnny Guerrero was an outstanding tech that delivered the most professionalism I have seen in a very long time. He was able to diagnose and perform technical services on our unit that gave our unit most up-to-date technology. Recommended for any services needed.

J. Calen

Our technician, Cesar, was great! He was knowledgeable, professional, and worked very fast. We will call him again whenever a plumbing need arises, and would recommend him to our friends.

L. Rydalch

We’ve had two separate experiences with Temperature Control and both were positive. Their techs know their stuff and take their time and thoroughly check everything out during their diagnostic process. I will continue using them moving forward. Jesus, the technician that came out yesterday, was just amazing!

L. Busse

We experienced outstanding service today from Eddie Cervantes and Rick with Temperature Control Plumbing. This team made a service call today in response to our Sunday call to the company. They identified our hot water issue quickly, and resolved it during their call. Five star service and professionalism from both technicians!

H. Montgomery