With the signing of the Inflation Reduction Act by President Joe Biden on August 16, 2022, comes questions of what the new legislation means for homeowners. To better understand how you can help your customers save money, while making their homes more energy efficient, let’s break down what the Inflation Reduction Act is and how the programs work.
What is the Inflation Reduction Act?
The Inflation Reduction Act (IRA) is a $740 billion climate and health care bill that aims to put the U.S. on a path to emissions reduction by investing in climate protection. According to the Committee for a Responsible Federal Budget – a bipartisan, non-profit organization – the Act includes $386 billion of climate and energy spending and tax breaks to promote clean energy generation, electrification, green technology retrofits for homes and buildings and greater use of clean fuels, among other purposes.
How Can the Inflation Reduction Act Save Homeowners Money?
As part of the Inflation Reduction Act, homeowners will have access to cost-saving options for purchasing energy efficient and electric appliances or making home improvements to electrify their home or increase its energy efficiency.
The IRA’s most meaningful impacts to HVAC are in two key areas: the Energy Efficient Home Improvement Tax Credit (25C), and the High Efficiency Electric Home Rebate Program (HEEHRP). The first provides a federal tax credit to homeowners who install high-efficiency equipment. And the second, which will roll out to state energy offices in the coming months, includes rebates to qualifying low and moderate-income households for installing heat pumps. Understanding these programs will help you better guide homeowners as they are making decisions about high efficiency HVAC options.
Energy Efficiency Home Improvement Tax Credit (25C)
The previous Nonbusiness Energy Property credit (25C) for installing high-efficiency equipment – such as heat pumps, central air conditioning systems, furnaces, hot water boilers and more – was extended through 2022 and provides federal tax credits of up to $500.
The amended Energy Efficient Home Improvement Credit (25C) begins in 2023 and extends the offering through 2032. It increases the tax credit limits for high-efficiency equipment as follows:
- Up to $600 each for a qualified air conditioner or gas furnace, with an annual cap of $1,200
- Up to $2,000 with a qualified heat pump, heat pump water heater, or boiler
Updated tax qualification certificates can be downloaded from the LennoxPros.com IRA landing page.
High Efficiency Electric Home Rebate Program (HEEHRP)
will enable states to provide up to $14,000 in direct consumer rebates for families to buy heat pumps or other energy-efficient home appliances, saving eligible families at least $350 a year on utility bills. For ENERGY STAR® certified heat pumps, installation rebates can total up to $8,000. Rebates are also available to upgrade electrical panels, insulate and seal a house, and to improve home electrical wiring. To qualify for the High Efficiency Electric Home Rebate Program, household income must be less than 150% of the area median income.
Overall, the rebate program allocates $4.5 billion to states for home energy improvement projects. Rebates and funding will be handled on the state level, not by individual HVAC manufacturers or dealers.
The effective dates and funds available will vary by state. Encourage homeowners to check with their tax professional for pending state announcements.
HEEHRP provides HVAC rebates up to $14,000 per household, including:
- Up to $8,000 for installing ENERGY STAR® qualified heat pumps
- Up to $4,000 for electrical panel upgrades
- Up to $1,600 for home insulation and sealing
- Up to $2,500 for home electrical wiring improvements
Eligibility and the amount of the rebate depends on household income:
- For households below 80% of area median income, 100% of the system purchase price qualifies for the rebate.
- For households that fall within 80% to 150% of area median income, 50% of the system purchase price qualifies for the rebate.
Households above 150% of area median income do not qualify for the HEEHRP rebate
Further good news is that Dealers who perform any qualified electrification installation services under the HEEHRP rebate program with an income-qualified homeowner could receive up to $500 in return.
How Does Lennox Fit In?
With the new rebate program and extended tax credits, there’s no better time to sell and inform homeowners about the Lennox lineup of innovative, energy-efficient home comfort solutions.
Lennox boasts a broad assortment of ENERGY STAR® qualifying products eligible for these programs – including but not limited to the Dave Lennox Signature® Collection SL25XPV, the most efficient heat pump on the market with a SEER rating up to 24, the SL28XCV, the most efficient air conditioner on the market with a SEER rating up to 28, and the SLP99V, the most efficient furnace on the market boasting an efficiency rating of up to 99%.
As Lennox continues to lead the advancement of heat pump technology, we were recently recognized by the U.S. Department of Energy for being the first HVAC manufacturer to prototype a next-generation electric heat pump that can effectively heat homes in extreme cold climates. This new technology will push the industry forward in energy efficiency and cost savings for homeowners.
How Can I Help Homeowners Take Advantage?
If you have installed new, high-efficiency equipment for customers on or after January 1, 2022, go to the LennoxPros.com IRA landing page to confirm which products qualify for the tax credit. You can then add value and build trust by proactively contacting those homeowners to let them know that they qualify for a tax credit. Simply direct them to the Lennox.com tax credit landing page to download the relevant tax qualification certificate, then encourage them to consult their tax professional to confirm eligibility and submit the certificate with their federal tax return to receive the credit.
For homeowners interested in replacing or repairing their HVAC system, walk them through the Lennox lineup of innovative, energy-efficient home comfort solutions. Visit the LennoxPros.com IRA landing page to find the list of products that qualify for 25C federal tax credits up to $500 in 2022 and up to $2,000 beginning in 2023. You can also direct homeowners to the Lennox.com tax credit landing page to learn about pending HEEHRP state rebates up to $14,000 and how to determine if they may qualify based on their household income. Don’t forget to encourage them to consult with their tax professional to confirm eligibility before making a final purchase decision.
Our goal is to help you be armed and informed with this information so you can drive sales of energy-efficient home comfort solutions, build deeper customer relationships, and do the planet a little bit of good in the process.
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