Who doesn’t love getting a little money back at the end of the tax year? That’s why we want to share the news about the Inflation Reduction Act tax credits, applicable to most new comfort system installations by Heritage Home Service. Read on to learn more!
What is the Inflation Reduction Act?
The Inflation Reduction Act (IRA) was enacted by Congress in August of 2022, becoming effective on January 1st, 2023. Among other things, it contains provisions for a series of tax credits and state rebates in order to combat inflation and incentivize energy efficient home improvements. In short: This means you could save up to $3,200 when you file your taxes next year! In order to make the process easier for you, we’ve provided all the details you’ll need to make sure your next comfort system installation qualifies for these unprecedented savings.
DISCLAIMER: While we’ve done our best to summarize how IRA tax credits can save you money on residential improvement projects (like the ones you can get from Heritage Home Service), this should not be considered tax advice. Any questions about your eligibility for IRA tax credits or additional state rebates should be discussed with your tax advisor.
How does the Inflation Reduction Act save you money?
You’ll need to meet all qualifications included in this guide for your 2023 system installation, and use the applicable IRA tax credits when you file in 2024. The credit is normally capped at $1,200, but can be exceeded by an additional $2,000 when you install a heat pump system. Your total possible credit for the 2023 tax year is $3,200.
Section 25C identifies energy-efficient home improvements (including comfort systems) as being eligible for a tax credit during the 2023 tax year. This credit applies up to 30% off your entire installation cost, with additional credits available only for heat pump installations. Covered under 25C are a wide range of equipment such as new furnaces, air conditioners, boilers, water heaters, and heat pump installations. This means that if you’ve been considering a new comfort system for 2023, there’s a good chance you could take advantage of these credits when you file your taxes next year!
IRA Credit Breakdown
- Credit applies to 30% of the total install cost.
- Annual cap is $1,200.
- Annual cap can be exceeded up to an additional $2,000 when a heat pump/heat pump water heater/biomass stove is installed (Note: Heritage does not install biomass stoves).
- Total annual cap is $3,200 (if a heat pump is installed).
Heritage Services That Qualify for IRA Tax Credits:
- Equipment Installations (See Important 25C Qualification Information)
- New HVAC System Installation (AC, Furnace, Boiler, Heat Pump, Combi Units)
- New Water Heater Installation (Standalone or Indirect)
- Electrical Upgrades (See Important 25C Qualification Information)
- 200 Amp Service
- Smart Breakers
Important 25C Qualification Information – Meets ALL 4 Steps
Almost all Heritage installed equipment meet these requirements. To ensure eligibility, just let us know you want your new improvement to meet the 25C tax credit requirements. P.S. Make sure you have all of your paperwork come tax season! Heritage makes it easy by keeping all of your installation information digitally on your customer account. Paper copies can be requested at any time.
Before you buy, make sure your improvement meets all of these 4 requirements:
- Improvements must be made in an existing residential home (owner occupied).
- All installed equipment must meet or exceed either the CEE or Energy Star standards depending on equipment type. These include:
- AC Systems
- Heat Pumps
- Heat Pump Water Heaters
- Water Heaters (Standalone & Indirect)
- Furnaces (Oil Must Be Energy Star Certified)
- Boilers (Oil Must Be Energy Star Certified)
- Any electrical improvement must be made to accommodate 200 amp load capacity or more, and meet all NEC requirements. Additional panels, sub-panels, or circuitry installed in conjunction with 25C eligible equipment must also meet these standards.
- Retain records of equipment installed, price, efficiency rating, date of installation, and any product identification numbers to submit with your tax return.
State Rebates – HEERA & Mass Saves
As of April, 2023, funding for these rebates has yet to be provided by the federal government. When trying to determine availability, it is best to contact your state provider to determine if your improvements will be eligible for any existing or future energy efficiency rebates prior to installation.
In addition to the federal tax credit, New Hampshire and Massachusetts are both slated to have available funds for their state rebate programs throughout 2023. These rebates can save you thousands of dollars on top of your federal credit for 25C eligible improvements made on qualifying households. As of now, funding has not yet been made available by the federal government to these programs. A decision on funding is slated to be made mid 2023. For more information on when these rebates will be available and how to apply, please visit your state’s respective program website by following the instructions below:
New Hampshire: energy.nh.gov
Go To => Rules and Regulatory
Go To => Inflation Reduction Act Funding Programs
Save Big On Your 2023 Comfort System Installation with the IRA Tax Credit
Simply put: If you aren’t asking about this credit for your next 2023 system installation, you’re leaving money on the table! Most modern high-efficiency equipment will be eligible for this credit when installed by a licensed provider who will meet or exceed all qualifications necessary. So, why not trust in the experts at Heritage Home Service to get the job done right the first time? As the region’s provider of choice, our dedicated installation team is ready to help you tailor design a system that is customized to your home’s exact needs, and one that will provide you and your family comfort for years to come. Contact us today to get the process started with a 100% free, no obligation quote for a quality comfort system installation by Heritage.
*Disclaimer: Heritage Home Service does not guarantee the availability of tax credits or rebate funds, nor the specific rebate or credit amounts that may be available to each individual. Rebates and tax credits are subject to change and may vary depending on factors such as geographic location, income level, and the specific details of the heating and cooling system being installed. While we make every effort to provide accurate and up-to-date information about available rebates and tax credits, it is ultimately the responsibility of the homeowner to research and verify eligibility for any available incentives. In addition, please note that the information provided by Heritage Home Service regarding tax credits is for general informational purposes only and should not be considered tax advice. Homeowners should consult with a qualified tax advisor to determine their eligibility for tax credits and to receive specific advice on their individual tax situation. Heritage Home Service is not responsible for any errors or omissions in the information provided, and we make no guarantees or warranties regarding the availability or applicability of any tax credits or rebates.