Colorado Inflation Reduction Act Information
Here’s why Firestone property owners should care about the Inflation Reduction Act of 2022.
It’s an opportunity.
As an experienced homeowner, you always want to improve your comfort and save money. The Inflation Reduction Act (IRA) gives you a winning strategy to do both.
Signed into law in August 2022, the Inflation Reduction Act provides tax credits and rebates to encourage Colorado homeowners to swap out their old fuel-burning appliances for high-efficiency equipment that does a better job at a lower operating cost.
How to Take Advantage of the Inflation Reduction Act
The best place to start is with a professional energy audit. Carbon Valley Heating & Air can help pinpoint areas in your home or business where you can save money and reduce your carbon footprint, allowing you to make the best use of the tax credits and rebates.
Our licensed specialists can recommend the best heating, cooling, and indoor-air-quality (IAQ) products for your home that carry the ENERGY STAR® rating and qualify for financial incentives.
And the good news? The IRA offers a partial tax credit of up to $150 on energy audits. schedule-one-today.
HVAC Tax Credits
The Inflation Reduction Act extends and expands the existing Energy-Efficient Home Improvement Credit (Section 25C) and the Residential Clean Energy Credit (Section 25D) to homeowners.
The tax credits run through 2032 and apply retroactively to products installed beginning on January 1, 2022. You can claim 30 percent of the project cost for HVAC improvements. The maximum credits are:
- Air Conditioners—Up to $600
- Heat Pumps—Up to $2,000
- Furnaces and Boilers—Up to $600
- Geothermal Systems—Up to 30 percent on purchase and installation
- Solar Paneling—Up to 30 percent on purchase and installation
Here is a closer look at HVAC products and eligibility requirements:
- All ducted air-source heat pumps with the ENERGY STAR label qualify.
- Split air conditioner systems must have a Seasonal Energy Efficiency Rating (SEER2) of 16 or more. All packaged systems with ENERGY STAR certification are eligible.
- Gas furnaces must have an annual fuel utilization efficiency (AFUE) rating of at least 97 percent.
- Gas boilers with an AFUE of at least 95 percent qualify.
- Oil-fueled boilers and furnaces must be capable of using fuel blends.
Why buy now? Rising fuel prices mean you pay more every time you switch on your HVAC system. You can practically cut your utility bills in half with high-efficiency equipment and proper maintenance, according to the U.S. Department of Energy (DOE).
The Inflation Reduction Act set aside a $4.3 billion budget, with the money allocated to individual states for disbursement. Funding will vary from state to state, and eligibility is income-based.
The High-Efficiency Electric Home Rebate Act, for example, covers 100 percent of electrification project costs (up to $14,000) for low-income households and 50 percent of costs (up to $14,000) for moderate-income households.
Here’s how some of those rebates would work:
- $8,000 for a heat pump for space heating
- $4,000 for an upgraded breaker box
- $2,500 for upgraded electric wiring
- $1,750 for a heat pump water heater
- $1,600 for insulation, air sealing, and ventilation
- $840 for an electric stove, cooktop range, or oven
- $840 for an electric clothes dryer
The rebate program is not available to all households. Because the funds are being allocated to state offices, and each state gets to decide to a certain degree how to distribute the money, it will take some time to implement the rebate program.
The tax credits, in contrast, are in place right now and will continue to be for the next decade.
Buy Now and Save
Carbon Valley Heating & Air wants you to get the best deals at the best prices. Remember to save your receipts and other relevant records so that you can account for the purchase when you file your taxes or apply for the rebates.
Lower your energy use, help preserve our state’s natural resources, and save money! Upfront costs are typically the biggest obstacle to upgrading your heating and cooling system. The Inflation Reduction Act of 2022 overcomes that barrier.