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How The Inflation Reduction Act Can Help You
Posted: February 27, 2023 by Hey Neighbor

Here's why Northeast Ohio residents should care about the Inflation Reduction Act (IRA) of 2022 - it's an outstanding opportunity for your family. As a conscientious homeowner, you always want to improve your comfort and save money at the same time. The IRA gives you a winning strategy to do both.

Signed into law in August 2022, the IRA provides tax credits and rebates to encourage homeowners to swap out their old appliances for high-efficiency units that perform better at a lower operating cost.

Are your furnace and air conditioning units ten years old - or older? If the answer is yes, now is the perfect time to replace them - or switch to a heat pump.

Maximizing your benefit from the IRA

Our neighborly team feels that the best starting point is with a professional energy audit. Hey Neighbor LLC | Ron the Furnace Man can identify areas in your home where you can save money and reduce your carbon footprint, allowing you to make the most of the tax credits and rebates.

Our trained specialists will recommend the best heating, cooling, and indoor air quality (IAQ) products for your home that carry Energy Star® certification and qualify for financial incentives. Even better, the IRA features a partial tax credit of up to $150 on energy audits. Schedule one today!

Tax credits

The IRA extends the existing Energy-Efficient Home Improvement Credit (Section 25C) and the Residential Clean Energy Credit (Section 25D) to include homeowners. The tax credits are offered through 2032 and apply retroactively to products installed as early as January 1, 2022. In addition, you can claim 30% of the project cost for heating and cooling improvements. The maximum credits are:

• Furnaces and boilers - up to $600
• Air conditioners - up to $600
• Heat pumps - up to $2,000
• Geothermal systems - up to 30% on purchase and installation
• Solar paneling - up to 30% on purchase and installation

Here's a closer look at HVAC products and their eligibility requirements:

• Gas furnaces must have an annual fuel utilization efficiency (AFUE) rating of at least 97%.
• All ducted air-source heat pumps with the Energy Star® label qualify.
• Split air conditioning systems must have a Seasonal Energy Efficiency Rating (SEER2) of 16 or more.
• All packaged systems with Energy Star® certification are eligible.
• Gas boilers with an AFUE of at least 95% qualify.
• Oil-fueled boilers and furnaces must be capable of using fuel blends.

But why buy now? One compelling reason is that rising fuel prices mean you pay more every time you turn on your HVAC system. Fortunately, according to the U.S. Department of Energy, you can cut your utility bills in half with high-efficiency equipment and proper maintenance.

Rebates

The IRA reserved a $4.3 billion budget, with money allocated to each state for disbursement. Funding varies from state to state, and eligibility is income-based. For example, the High-Efficiency Electric Home Rebate Act covers 100% of electrical project costs (up to $14,000) for low-income households and 50% of costs (up to $14,000) for middle-income households. Here's how some of these rebates work:

• $8,000 for a heat pump
• $4,000 for an upgraded breaker box
• $2,500 for upgraded electrical wiring
• $1,750 for a heat pump water heater
• $1,600 for insulation, sealing, and ventilation
• $840 for an electric stove, range, or oven
• $840 for an electric clothes dryer

The rebate program isn't available to all households. Because the funds are allocated to state offices, each state decides how to distribute its money to a certain degree, and it will take awhile to implement the rebate program. The tax credits, on the other hand, are in place now and will continue to be for the next decade.

Buy now and save!

All of us here at Hey Neighbor LLC | Ron the Furnace Man want you to enjoy the most comfort for your family, and to save money, too. Remember to keep your receipts and other relevant records so that you can claim the purchase when you file your taxes and apply for these rebates.

By taking advantage of the IRA's benefits, you'll lower your energy use, help preserve our state's natural resources, and save money! The initial cost is typically the biggest obstacle to upgrading your heating and cooling system, and the Inflation Reduction Act of 2022 overcomes that barrier. Have more questions about the IRA? You can read all about it on the Environmental Protection Agency's website.

And, of course, we're always happy to help our neighbors in Northeast Ohio. So call us today, and we'll make you and your wallet as comfy as we can!