Rebates make previously inaccessible home upgrades something any homeowner can rely on and benefit from. Newer rebates, like the Inflation Reduction Act of 2022, focus on not only benefiting individuals, but the country as a whole through greener energy consumption.
What is the Inflation Reduction Act of 2022?
On August 16, 2022, the Inflation Reduction Act (IRA) was signed into law by the United States government. The ultimate goal of this act was to help expedite reduction of greenhouse gas emissions by 40% before the end of 2030. As part of this goal, the IRA offers cost-reducing rebate options for homeowners who take specific steps to improve the energy efficiency of their homes.
Which included tax credits are most relevant to Sedgwick Heating customers?
There are two tax credits included in the IRA that are more relevant to current and future Sedgwick customers than the rest. They are the Energy Efficient Home Improvement Tax Credit (25C) and High Efficiency Electric Home Rebate Program (HEEHRP).
Energy Efficient Home Improvement Tax Credit (25C)
You might already be familiar with the previous iteration of this tax credit: the Nonbusiness Energy Property Credit (25C). It had originally been slated to expire at the end of 2021, but the IRA extended its life and changed its name to the Energy Efficient Home Improvement Credit.
Originally, the expired version of this credit could cover 10% of the costs of installing certain energy-efficient HVAC upgrades to your home. It had a lifetime limit of $500 with smaller individual limits for specific items like air circulating fans ($50), furnaces and boilers ($150), and a few specific varieties of water heaters, heat pumps, and AC systems ($300).
The new, revived version of this tax credit takes the structure of the old one, but upgrades the things a little bit. It will now be equal to 30% of the costs for eligible home improvements up to $600 except for HPs, which will be covered up to $2,000. It will now be equal to 30% of the costs for eligible home improvements over the course of the year with an annual limit of $1,200 in savings.
Amendments to previous requirements include:
- The ability to combine individual gas furnace and air conditioner rebates for a total yearly savings of up to $1,200
- Qualifying units must meet or exceed the highest efficiency tier that is not the advanced tier
Additionally, this new, revised Minneapolis tax credit that impacts any new heat pump, furnace or boiler installation will remain in effect until December 31, 2032.
High Efficiency Electric Home Rebate Program (HEEHRP)
The High-Efficiency Electric Home Rebate Act (HEEHRA) offers consumer rebates at point-of-sale for low- and moderate-income homeowners seeking electrical home upgrades. The goal of this rebate is to make energy efficiency more accessible to those that can most benefit from associated utility cost savings.
Available rebates go up to $14,000 per household and include:
HEEHRP provides HVAC rebates up to $14,000 per household, including:
- Up to $8,000 installation rebate for Energy Star rated heat pumps
- Up to $4,000 rebate for an electrical panel upgrade
- Up to $1,600 rebate for new insulation and sealing
- Up to $2,500 for improvements made to home electrical wiring
The rebate amount an individual is eligible for will depend on household income:
- If your household’s income falls below 80% of the median income in your community, 100% of your qualifying product purchase will qualify for the rebate
- If your household’s income is within 80% and 150% of the median income in your community 50% of your qualifying product purchase will qualify for the rebate
- If your household’s income is above 150% of the median income in your community, you will not be eligible for any tax savings through the HEEHRP rebate
Next Steps: Caution and Communication
Ultimately, these rebates will be up to each state and there’s no set-in-stone date for program rollout yet. Because states will, according to all available sources, be able to modify these programs, there is a chance that this information will have to change as well.
That’s why we recommend approaching all information about these tax credits with caution. On our end, we’ll do our best to make sure this page stays updated with the latest information as it becomes available.
If you have any other questions about this page or Minneapolis heat pump tax credits in general, please contact the team at Sedgwick Heating and we’ll do our best to get you answers.