What Is the Inflation Reduction Act?
The Inflation Reduction Act of 2022 created a $369 billion bundle of federal programs designed to reduce the rate of inflation in the country and its impact on residents. A portion of that investment is aimed at making green technology and climate-friendly home-improvement programs.
Several programs include significant rebates and tax credits for homeowners who purchase heat pumps, water heaters and other energy-efficient home upgrades. It’s a great deal for homeowners. You can save money on home improvements and lower your monthly utility bills.
How Will the Inflation Reduction Act Affect Me?
How homeowners get Inflation Reduction Act heat pump tax credits and rebates depends on their incomes. There are two programs available: High-Efficiency Electric Home Rebate Act (HEERA) rebate and the Inflation Reduction Act tax credits.
How do these Inflation Reduction Act heat pump tax credit and rebate programs work? Here’s a closer look:
- High-Efficiency Electric Home Rebate Act (HEEHRA): The HEEHRA program offers a heat pump rebate through the Inflation Reduction Act. Available to low-income and moderate-income families, the HEERA rebate covers up to 100% of eligible heat pump and water heater purchases and installation for low-income homeowners. It also covers up to 50% for moderate-income homeowners. Participants can use the rebate for multiple upgrade purchases, but there is a monetary cap at $14,000 per customer.
What Are the HEERA Income Levels?
- Low-Income Homeowners: Income less than 80% of the area median income.
- Moderate-Income Homeowners: Income of 80-150% of the area median income.
- Inflation Reduction Act Tax Credits: Homeowners whose incomes don’t meet HEEHRA limits are eligible for a tax credit. Starting on Jan. 1, 2023, the Inflation Reduction Act heat pump tax credit offers a 30% tax credit on the purchase and installation of heat pumps — with a maximum credit of $2,000 for a heat pump. Homeowners can make additional green energy upgrades to their home through the program but are limited to a total of $3,200 in tax credits per year.
Additional Heat Pump Rebates for Denver, CO, Residents
On top of the federal rebates, there’s an extra set of Denver heat pump rebates available. These rebates offered by the city of Denver provide $1,500 to $3,500 rebates for air-source heat pumps. The city also offers other rebates for energy-efficient home upgrades.
What Heat Pumps Qualify for the Inflation Reduction Act?
Only highly efficient heat pumps are eligible for the Inflation Reduction Act rebates and tax credit. They must at least have ENERGY STAR® certification in order to be eligible for the HEEHRA or tax credit programs.
Ask our experienced pros at Lakeside Heating and Air Conditioning for more details on which heat pumps, mini-split heat pumps and water heaters are covered by the discounts.
How Do I Get the Inflation Reduction Act Rebate?
Getting an Inflation Reduction Act rebate or tax credit is easy. It has two programs that work in different ways:
HEEHRA Rebate: HEEHRA rebate will be provided at the time of purchase — acting like a discount to the price of a heat pump purchase and installation. Exact details of how HEEHRA will work has not been released yet by the Department of Energy.
Tax Credit: Those whose incomes don’t qualify for the HEEHRA rebate can instead claim the tax credit. The credit reduces the amount of money a purchaser owes the Internal Revenue Service (IRS) on their taxes.* It can be claimed the same tax year the heat pump was purchased. So, keep your receipts!
*Consult with a tax professional for details on how to apply.
Call Lakeside Heating & Air Conditioning to Learn More About Heat Pump Rebates
The Inflation Reduction Act tax credits and rebates are great ways to save money on a high-efficiency heat pump or water heater. It’s better for the environment and your checkbook.
The home comfort experts at Lakeside Heating and Air Conditioning have the latest details on these and other discount programs. Our skilled crews are known for superior heat pump and water heater installation in Denver, CO, and surrounding communities.
Put our experience to work for you. Reach out today to schedule an appointment and find out more about how you could save money on a heat pump.