President Joe Biden signed the Inflation Reduction Act of 2022 (IRA) into law on August 16. The IRA aims to alleviate inflation by lowering prescription drug prices, reducing the deficit, and halting global warming.
The largest ever federal legislation addressing climate change, the IRA invests $369 billion in clean energy sources and technologies that improve energy efficiency. Part of this includes offering significant rebates and tax incentives to homeowners who purchase heat pumps.
In fact, many Americans will be eligible for a free heat pump to cool and heat their home in 2023. Wondering if you qualify? Click here to skip ahead!
I’m ready for my new heat pump!
What’s a heat pump?
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.
Heat pumps are most popular in the Southern states. In North Carolina and South Carolina, for example, more than 40% of homes have heat pumps.
Older heat pump models could not heat well in frigid temperatures. So, they are generally not as popular in colder areas of the country. But new technologies let modern heat pumps operate effectively in temperatures of -10℉ and below.
Since electricity powers heat pumps, they’ve been slow to catch on in areas with mostly older homes with gas hookups. Generally, gas is less expensive than electricity, so people with access to a gas utility often prefer to use it for their heating needs.
Why heat pumps?
Part of the IFA funds the development of renewable energy sources, including solar, wind, and hydro. Energy made by these means produces 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 clean electricity sources. The first step in that direction is for homeowners to upgrade to energy-efficient electric appliances. Next, the IFA will support an infrastructure that eventually swaps out traditional energy for a cleaner variety.
Besides the enhanced energy efficiency, heat pumps have several advantages over traditional heating equipment, like a furnace:
|📏 Space savings||Heat pumps do the job of an air conditioner and a furnace, reducing the amount of bulky equipment in and around your home.|
|💰 Cost savings||An AC and heater combined, you’ll only need to purchase one unit instead of two.|
|✉️ Lower utility bills||Heat pumps run more efficiently than traditional furnaces. That’s good for the environment and your monthly bills.|
|💨 Better air quality||Many heat pumps have dehumidifying and air filtering capabilities, improving your home’s air quality while heating or cooling.|
| Improved safety||Heat pumps don’t have potential gas leaks or tip-over dangers associated with other types of heaters.|
|👂 Less noise||Heat pumps run more quietly than a traditional furnace or AC compressor.|
One of the biggest benefits is that buying one could net you hefty savings thanks to the IFA.
What is the HEEHRA?
The IFA offers rebates or tax deductions to homeowners that purchase a heat pump.
The High Efficiency Electric Home Rebate Act (HEEHRA) is the official name of the IFA’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.
The HEEHRA rebates are available for low- and moderate-income households. The amount of each rebate depends 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 heat pumps.
The HEERHA heat pump rebates are significant for low-income homeowners. According to HomeAdvisor, heat pumps cost an average of $5,792. In most cases, low-income households will get a new heat pump for free.
Middle-income households will save an average of $2,896 on a new heat pump. And above-middle-income households will get an average tax credit of $1,737.60.
How to get a heat pump rebate
State governments will execute the HEEHRA rebates. The Department of Energy will likely issue guidelines to the states in late 2022. The heat pump rebates will presumably apply to equipment purchased after January 1, 2023.
The IRA heat pump tax credits will likely also go into effect in 2023. To receive your tax credit, save your receipt and declare it on your tax return. If you can’t wait until 2023, there is currently a lesser $300 tax credit for heat pumps that meet the Consortium for Energy Efficiency (CEE)’s top-tier efficiency standards.
Will a heat pump work in my area?
Heat pumps can work in temperatures below 0℉ and colder. Some manufacturers design special models that perform better in more extreme climates.
However, heat pumps do not perform at their most efficient when the temperature reaches freezing. Many homeowners in cold areas supplement their heat pump with a furnace. Doing this can still reduce energy consumption and net you IRA incentives.
Similarly, your heat pump might not deliver peak cooling performance at temperatures above 100℉. Consider ceiling fans or portable air conditioners to keep comfortable if you live in an area that experiences excessive heat regularly.
Click below to connect with an HVAC professional who can help you choose the right heat pump for your home.
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Source: HVAC Feed 1