Northeast HVAC News Guest Column
The IRA’s Energy Efficient
Home Improvement Credit Requirements.
Slated to pump billions into the U.S. residential sector, the
Inflation Reduction Act promises to transform the industry.
Although rebates depend on state rollouts, which are still in
development, tax credits, such as the Energy Efficient Home
Improvement Credit, are available now.
IRA increased the limit of this particular tax credit from a
$500 lifetime cap in 2022 to an annual credit of up to $1,200,
available at least through 2032. For even more increased
savings, the tax credit limit for heat pumps is set at $2,000,
which can be combined with the $1,200 allotted for the other
assets on this list. To ensure your customers can take advantage
of this incredible money-saving opportunity, read on to ensure
the assets you install qualify.
Furnaces, Air Conditioners, and Electric and Gas Water
Natural gas, propane and oil furnaces; central air conditioners;
hot water boilers; and natural gas, propane, and oil water
heaters must meet the
Energy Efficiency’s (CEE) highest efficiency tier of
requirements (excluding advanced tiers). Requirements vary
according to the climate regions specified by the Department of
Energy (DOE). The CEE specifies Seasonal Energy Efficiency
Rating 2 (SEER2), Energy Efficiency Rating 2 (EER2), criteria
for each qualifying furnace, air conditioner, and Uniform Energy
Factor (UEF) water heater.
Heat Pumps and Heat Pump Water Heaters
Electric or natural gas heat pumps and electric or natural gas
heat pump water heaters must also meet the CEE’s highest
efficiency tier of requirements (excluding advanced tiers) for
SEER2, EER2, and HSPF2, which differ by the climate regions
defined by the DOE.
Heat pumps earn the special distinction of receiving an
increased tax credit of $2,000, which can be combined with the
$1,200 allotted for the other assets on this list. Also of note,
the CEE calls for adequate capacity of air source heat pumps in
low ambient temperatures.
Insulation and Air Sealing
To be eligible for the tax credit, insulation and air sealing
materials or systems must meet the criteria established by the
International Energy Conservation Code (IECC) standard in effect
at the start of the year two years prior to the installation. In
other words, insulation or air sealing materials installed in
2023 must meet the criteria established by the IECC in effect on
January 1, 2021.
IECC requirements vary by the DOE’s eight climate zones, R-value
(how well the insulation prevents the flow of heat into and out
of the home), whether an attic space exists or not, and whether
a basement or crawl space exists.
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Qualifying panelboards, sub-panelboards, branch circuits, and
feeders must be installed according to the National Electric Code
and have a load capacity of 200 amps or more to earn the $1,200 tax
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Oil Furnaces and Hot Water Boilers
Oil furnaces and hot water boilers qualify if they meet 2021 ENERGY
STAR® efficiency criteria and the manufacturer rates them for use
with fuel blends of at least 20 percent of the volume. Or, if the
oil furnace or water boiler is installed in 2027 or later, the
annual fuel efficiency rate requirement increases to 90 percent and
the item is approved by the manufacturer for use with fuel blends of
at least 50 percent.
Biomass Stoves and Boilers
To qualify for the Energy Efficient Home Improvement Credit, biomass
stoves and biomass boilers must have a thermal efficiency rating of
at least 75%.
Exterior Doors that meet ENERGY STAR requirements, qualify for a tax
credit of up to 30% of the cost or a maximum of $250 per door with a
maximum of two exterior doors. Compared to other doors, ENERGY STAR
exterior doors leak less and admit less heat into the home.
Windows and Skylights
To qualify for the Energy Efficient Home Improvement Credit, windows
and skylights must meet the most efficient ENERGY STAR certification
requirements. The tax credit covers 30% of the total cost, up to a
maximum of $600. Energy-efficient windows insulate the home better,
permit less solar heat into the home, and leak less.
IRA Resource Center
This article covers just one tax credit included in the IRA; the IRA
establishes additional tax credits, as well as rebates that remain
to be implemented by state energy offices. Thankfully, you don’t
have to navigate these complexities alone.
One advantage of
membership in the Pearl Network is that Pearl Certification is
constantly monitoring IRA developments as they become available and
communicates these updates to Pearl Network Contractors.
Inflation Reduction Act Resource Center provides a convenient
central location of key IRA information, including industry-specific
tax credit reference sheets, webinar recordings, sample IRA text for
business websites, FAQs, and more.
If you have questions about the IRA or would like to request
additions to the resources center, please email
IRA2022@pearlcertification.com. Or if you’d like to gain access
to the Inflation Reduction Act Resource Center, complete the below
form to learn more about joining the elite Pearl Network.