Inflation Reduction Act

The 2023 Inflation Reduction Act: What Homeowners Need to Know

Looking to upgrade your home’s heating and cooling system? Did you know that the 2023 Inflation Reduction Act (IRA) offers rebates and tax credits for energy-efficient upgrades? Well, now you do. At NSG Heating and Air Specialists, we do everything we can to inform you of the benefits available to you and your home. Below is what you need to know about the IRA and its impact on homeowners like yourself.

What Is The Inflation Reduction Act?

The IRA was designed to reduce inflation and address some of the most pressing issues in the United States, including climate control and healthcare. This legislation includes tax incentives for clean energy upgrades, which can benefit homeowners who want to make their homes more energy-efficient.

How Can Homeowners Benefit from the IRA?

The IRA is designed to encourage businesses to become more eco-friendly and to address climate change. But, there are also benefits for homeowners. You can reduce your tax bill through AC rebates, heat pump rebates, and tax credits for energy-efficient upgrades, such as windows, doors, water heaters, furnaces, and heating and cooling systems.

Start by conducting a home energy audit or consulting one of our professionals to determine which upgrades would have the greatest return on investment. Each upgrade is eligible for a tax credit of up to 30% of the total cost, with different limits for each item. For example, the cap for insulation is $1,200, while tax credits for heat pumps can go up to $2,000.

Don’t feel you need to make all of the upgrades at once. The incentives for upgrades will be available for another 10 years, so it will be more financially sensible to do them one at a time.

Energy-Efficient Home Improvement Credit

Homeowners who upgrade their heating and cooling systems may be eligible for the Energy-Efficient Home Improvement Credit. This credit covers the cost of installing energy-efficient doors, windows, skylights, insulation, and heat pumps that regulate your home’s temperature more efficiently. It may also cover the cost of a home energy audit, water heaters, and upgrades to your electrical system to install new equipment.

Residential Clean Energy Credit

Homeowners who install residential clean energy systems, such as solar panels, wind turbines, geothermal heat pumps, home battery storage, and fuel cell energy systems, may be eligible for the Residential Clean Energy Credit. Each installation has its own set of eligibility requirements and credit limits. If the credit surpasses the taxes owed in a given year, it can be carried forward to the next.

Protect Your Home from Energy Price Spikes

Switching to renewable energy and energy-efficient upgrades can protect your home against energy price spikes and hedge against inflation. Fossil fuel prices are subject to international events and global demand, causing them to be volatile and unpredictable. On the other hand, renewable energy upgrades have the majority of their costs upfront and don’t require fossil fuels. Using the tax credits mentioned above can reduce the upfront cost of these upgrades, resulting in lower energy bills and fuel costs.

For example, switching to a heat pump can save a household between $500 to $1,000 per year on average in heating and cooling costs.

Claim Your Tax Credits

If you make upgrades and purchases for home energy upgrades in 2023, you can claim the tax credits when you file your 2023 tax return in 2024. Tax credits reduce the amount of taxes you owe or increase your tax refund.

We Are Here To Help

The 2023 Inflation Reduction Act helps homeowners to reduce their tax bills and save on energy bills by making energy-efficient upgrades. We at NSG Heating and Cooling Specialists want to do the most we can to help homeowners achieve maximum efficiency and eco-friendliness without breaking the bank. That is why we are helping homeowners take advantage of the benefits offered by the IRA, making homes more comfortable than ever. Look at the chart below for a more detailed breakdown of the tax credits and rebates, such as the AC rebates, that are available to you.

Energy Efficiency Home Improvement Credit High-Efficiency Electric Home Rebate Act (HEEHRA) HOMES Rebate Program
Qualifications Must owe taxes and purchase qualifying energy-efficiency appliances to be eligible. Must purchase qualifying energy-efficiency improvements to be eligible. You can receive a maximum of $14,000 in instant rebates. Must cut your energy usage by at least 20% to be eligible.
Low-Income Households (Less than 80% of the area’s median income) Receive a maximum of $1,200 in tax credits, equaling approximately 30% of your energy-efficiency improvement costs up to :
  • $600 for qualified air conditioners and heaters
  • $2,000 for qualified heat pumps, heat pump water heaters, and boilers (the $1,200 can be exceeded in this instance)
Receive an instant rebate for 100% of project costs up to:
  • $8,000 for heat pumps
  • $1,750 for a heat pump water heater
  • $4,000 for an upgraded breaker box
  • $2,500 for upgraded electrical wiring
  • $1,600 for insulation, ventilation, and sealing
  • $4,000 for cutting your energy by 20%
  • $8,000 for cutting your energy by 35%
Mid-Income Households (Between 80% & 150% of the area's median income) Receive a maximum of $1,200 in tax credits, equaling approximately 30% of your energy-efficiency improvement costs up to :
  • $600 for qualified air conditioners and heaters
  • $2,000 for qualified heat pumps, heat pump water heaters, and boilers (the $1,200 can be exceeded in this instance)
Receive an instant rebate for 50% of project costs, up to:
  • $8,000 for heat pumps
  • $1,750 for a heat pump water heater
  • $4,000 for an upgraded breaker box
  • $2,500 for upgraded electrical wiring
  • $1,600 for insulation, ventilation, and sealing
Receive an instant rebate of up to:
  • $2,000 for cutting your energy by 20%
  • $4,000 for cutting your energy by 35%
High-Income Households (Over 150% of the area’s median income) Receive a maximum of $1,200 in tax credits, equaling approximately 30% of your energy-efficiency improvement costs up to :
  • $600 for qualified air conditioners and heaters
  • $2,000 for qualified heat pumps, heat pump water heaters, and boilers (the $1,200 can be exceeded in this instance)
Not eligible Receive an instant rebate of up to:
  • $2,000 for cutting your energy by 20%
  • $4,000 for cutting your energy by 35%
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