August marked the second anniversary of the Inflation Reduction Act, which consisted of billions in dollars of incentives toward building decarbonization goals. To some, these incentives for high-efficiency and electric HVAC equipment and renewable energy are working. To others, not so much. Basically, it depends who you ask. According to the IRS, in 2023, the year the IRA’s enhancements to the program kicked in, more than 2.3 million individual tax returns claimed the Energy Efficient Home Improvement Credit (or 25C for its place in the tax code). The average credit per return was $882. Much of the rebate money is allotted to low- and middle-income households for the purchase of high-efficiency HVAC equipment. In 2023, the tax credit 25C was claimed for nearly 268,000 heat pumps, close to 500,000 central air conditioners, 670,000 home insulation projects, and 104,000 heat-pump water heaters. Critics of the IRA say that while there are parts of the IRA they can get behind, they worry about the inevitable backlash of heat pumps if they are sized incorrectly or installed poorly.

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