25C - ENERGY EFFICIENT HOME IMPROVEMENT TAX CREDIT

It’s important for distributors to know the various credits and rebates available, so they can better prepare contractors when customers are looking to purchase new HVAC products. Right now, the only actionable part of the IRA is the extension of the 25C tax credits, now called the Energy Efficient Home Improvement Tax Credit. 25C provides a 30% credit rate with an annual cap of $1,200 for HVAC products that meet the highest non-advanced Consortium for Energy Efficiency (CEE) tier:

• Up to $600 for qualified air conditioners and furnaces
• Up to $2,000 for qualified heat pumps

While the extension of the 25C tax credits includes rather small dollar amounts compared to some of the larger components of the bill, the real impact will be seen in 2025, when the individual states begin to roll out programs to take advantage of the IRA funds—this will be important for brands and distributors to monitor.

45L – NEW ENERGY-EFFICIENT HOME TAX CREDIT

The increased 45L tax credit, called the New Energy Efficient Home Tax Credit, provides developers and building contractors of new construction single-family and manufactured homes up to $2,500 in tax credits for Energy Star® certified new construction. The expansion also provides an even higher 45L tax credit of $5,000 for single-family and manufactured homes, as outlined by new Department of Energy (DOE) Zero Energy Ready Home requirements. Prevailing wage requirements must be satisfied for multifamily construction in order for contractors to receive the highest rebate opportunities. This expansion will extend the program to 2033.

BENEFITS 

The most significant step forward with the IRA is that it not only provides funding for equipment costs, but it also includes provisions to help customers offset some of the other costs. For example, oftentimes there can be unexpected costs associated with converting a gas furnace to a heat pump, as it can be expensive to run 240V wiring to the indoor unit, upgrading the breaker panel size, or upgrading ductwork in the home. These “unexpected” and hidden costs can be a barrier for some homeowners, causing them to put off making the switch from gas furnace to heat pump.

CEE RESIDENTIAL HEATING AND COOLING SYSTEMS INITIATIVE

The CEE Residential Heating and Cooling Systems Initiative encompasses a range of residential HVAC equipment, including central air conditioners, air source heat pumps, gas furnaces, gas-fired boilers, gas heat pumps, and connected thermostats. The primary objective of this initiative is to boost market penetration, increase adoption rates of advanced HVAC technologies with high efficiency, and support customized solutions tailored to customers' unique needs.

The CEE put the new tiers for Residential Electric HVAC into effect on January 1, 2023. These guidelines determine which equipment qualifies for the 25C homeowner tax credit, including several Oxbox products that can be viewed here.

REACH OUT TO AN HVAC PROFESSIONAL 

To ensure you’re making the most out of the credits and rebates offered through the IRA, we recommend homeowners reach out to their local HVAC professional, like your local Oxbox contractor. Our HVAC technicians can help homeowners assess their own unique comfort needs when seeking out more sustainable heating options like heat pumps, and likewise be a resource for homeowners to learn about what benefits they may qualify for, including special financing options, tax credits, and more.