President Biden signed the Inflation Reduction Act into law on August 16, 2022. Among other things, the law is an effort to support energy-saving investments. The measure is estimated to pump $737 billion into the U.S. economy. In terms of impact to homeowners, the law projects to reduce carbon emissions by 40% in the next seven years. According to ACCA, Congress believes that the HVAC industry is a major key in this effort. Major efficiency changes in air conditioning and heating equipment is essential in reducing fossil fuel usage in homes.
The High-Efficiency Electric Home Rebate Act (HEEHRA)
HEEHRA is the official name of the IRA heat pump incentive program. HVAC contractors can leverage tax credits and rebates when selling equipment upgrades and replacements systems. Many homeowners stay oblivious to these tax credits that the government offers to upgrade their systems. For many that are on the fence to replace their HVAC system, this rebate or tax credit could make the difference. The tax credits come from the $370 billion set aside for energy climate programs. This is money that goes directly to the homeowner to replace their aged fossil fuel equipment for high-efficiency electric systems powered by renewable energy.
Majestic AC is an Diamond-authorized distributor and installer of Mitsubishi products that are on the forefront of this movement. Here is Mitsubishi’s article on the HEEHRP.
Video about Heat Pumps from Mitsubishi
So how much can homeowners benefit?
The bill includes $4.28 billion high-efficiency electric home rebate program. This rebates up to $8,000 to install a high-efficiency electric heat pump to replace a gas furnace. This is a very attractive incentive especially for those that have aging gas systems. For those that do not qualify for the rebate program, the IRA bill allows for tax credits up to $2000 to install electric heat pumps.
Who qualifies for the Inflation Reduction Act heat pump rebate?
Homeowners whose household income is 80% below your area’s median income can receive the maximum rebate. This will cover your new, high-efficiency heat pump at 100% up to $8,000. If your household income is 81-150% of your area’s median income, you will receive up to 50% of the heat pump’s cost. For those above the 150% income threshold, you can receive a 30% tax credit of up to $2000 for a new heat pump. Here is a link to look up the median income in your area.
The bill has only been signed into law as of August 16, 2022 so the mechanism to get the rebates has not been set in place. The Department of Energy will issue guidelines for the state governments to execute the rebates sometime in the spring of 2023.
Are heat pumps good for the Woodlands and Spring Texas area?
Heat pumps are an HVAC appliance that both cools and warms your home. It is an energy-efficient alternative to a furnace and AC compressor. Heat pumps are powered by electricity. Homeowners in the Harris, Montgomery, Fort Bend and surrounding counties will benefit greatly from the IRA, rebates and tax credits. Heat pumps work great in areas that do not get overly cold. Many homeowners in extremely cold climates supplement their heat pumps with a furnace. Some benefits of a heat pump include:
- Space savings: heat pumps take the place of your furnace and air conditioner, reducing the amount of space needed.
- Saves money: Since a heat pump is an air conditioner and heater combined, only one piece of equipment needs to be purchased.
- Air quality improvement: modern, high-efficiency heat pumps are built with dehumidifiers and air filters that improves your indoor air quality.
- Less noise: today’s heat pumps run very quiet unlike older traditional furnace and AC compressor.