The Inflation Reduction Act of 2022, also known as the IRA, spans far and wide to help American homeowners address climate change and make their homes more energy efficient. By replacing outdated and inefficient heating and cooling equipment with heat pumps, homeowners in Massachusetts can greatly reduce the energy used for heating and cooling — and the IRA is making it more affordable for homeowners to do so!
Here is what you need to know about tax credits and heat pump rebates from the Inflation Reduction Act, and what we might be able to expect in the future.
Heat Pump Savings That Are Available Now
In addition to creating new rebate programs to help reduce the cost of heat pump installation, the IRA also extended and expanded a few existing programs. One of the biggest ones is the 25C tax credit, also titled the Energy Efficiency Home Improvement Tax Credit. That credit has been increased to 30% starting in 2023, as have the annual deduction limits for specific energy efficiency measures, like ducted heat pump and mini split installation.
What this means for homeowners: If you schedule heat pump or mini split installation in 2023, you’ll be able to deduct 30% of your total costs from your federal taxes due, up to a maximum of $2,000!
Heat Pump Incentives for 2023 and Beyond
The upgraded 25C tax credit isn’t the only new heat pump incentive to come out of the IRA! At some point in 2023, funding for two new energy efficiency rebate programs will be disseminated to individual states and made available to consumers. We don’t know the exact details for Massachusetts or New Hampshire yet, but we do know that MA will be receiving a total of $146,043,040, and NH will receive $69,702,360 for rebate programs that include heat pump and ductless mini-split installation!
There are two rebate programs that stem from the IRA (though you can only receive a rebate for :
HOMES (Homeowner Managed Energy Savings)
- Up to $4,000 in rebates for home energy efficiency retrofits with modeled energy savings of 35% or more
- Up to $2,000 in rebates for 20-34% in modeled energy savings
- Modeled energy savings can include heat pump installation, insulation, air sealing, efficient HVAC upgrades, and more
- Low to moderate income households can qualify for up to $8,000 in rebates
*Rebates cannot be combined with other federal grants or rebates
High Efficiency Electric Home Rebates
This rebate program is specifically for low to moderate income households. Individual rebates vary depending on the type of equipment, but heat pump HVAC systems qualify for up to an $8,000 rebate!
One note: you can’t double dip on IRA rebates for the same upgrade. So, for example, if you qualify for and take the HEEHR rebate for a new ducted heat pump system, you can’t also claim the HOMES program rebate for the same heat pump. But you CAN take advantage of the 25C tax credit on your new heat pump!
Kearney Helps You Save on Heat Pumps
As the heat pump and ductless mini split installer that Massachusetts and New Hampshire have trusted with their home comfort, we make it our business to ensure you receive any and all rebates you might qualify for (including Mass Save rebates). We will be updating our website with any news about the rollout of the HOMES and High Efficiency Electric Home rebates here on our website, and you can always call us with your questions. Or better yet, drop by our showroom and meet the office dog, Leroy!