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How the Inflation Reduction Act Makes Energy-Efficient Upgrades More Affordable

These days, amid economic uncertainty and climate change concerns, many homeowners are looking for ways to reduce their carbon footprints without breaking the bank by investing in new technology. After all, conserving water and being mindful of energy usage make a difference. Still, they can only go so far, particularly if the home has outdated appliances that consume excess energy. 

With these very concerns in mind, Congress passed the Inflation Reduction Act (IRA) to curb inflation, combat climate change, and make basic services more affordable. This massive bill includes various incentives designed to help homeowners “go green” with energy-efficient upgrades - without undue financial strain. This article will outline the key tax credits and rebates offered by the Act and how homeowners can take advantage of them!

What Does the Inflation Reduction Act Mean for Homeowners?

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The Inflation Reduction Act includes several tax credits and rebate programs for homeowners who complete certain energy-efficient home improvement projects. This could mean installing solar panels, upgrading insulation, installing weather-proof windows, updating the home’s electrical panel, or upgrading to an electric stove or a high-efficiency water heater.

Some of the biggest incentives are reserved for homeowners who replace their HVAC systems with more energy-efficient models. Lower-income families who upgrade to a high-efficiency heat pump system can get reimbursed for 100% of the cost. In contrast, those with average or above-average incomes can get partial rebates, saving homeowners thousands of dollars on a new heat pump.

What HVAC Systems Qualify for Incentives?

Since they tend to be the most efficient of all HVAC systems, heat pumps carry the biggest incentives under the IRA. Low-income households can qualify for 100% rebates on these systems, while average-income households can qualify for a 50% rebate (up to $8,000 in both cases). These systems must meet the Department of Energy’s minimum efficiency standards to qualify. High-income households can get up to a 30% rebate (totaling no more than $2,000) for heat pumps, but the heat pump must be in the Consortium for Energy Efficiency’s (CEE) top efficiency tier.

There are also incentives for upgrading to a traditional air conditioning system or heater. These are less efficient than heat pumps, so the subsidies aren’t quite as impressive - topping off at $600 per household - but they can still help. To qualify for this tax credit, the system will also have to be in the CEE’s top efficiency tier for that type of system.

However, homeowners should be aware that while there are a few small retroactive rebates and credits for other upgrades and installations completed before 2023, the incentives listed above only apply to systems installed in 2023.

Benefits of a New HVAC System


The tax credits and rebates offered by the IRA can save homeowners loads of money on an HVAC upgrade, but that’s only the beginning of the benefits of a new heating or cooling system. Homeowners installing a qualifying system will also enjoy the long-term energy savings a high-efficiency system can provide. 

As the authors of the Act intended, this will reduce the home’s carbon footprint and lead to lower energy bills. With today’s constantly improving HVAC technology, homeowners will likely find that a new system will keep their homes more comfortable and reduce the need for repairs - provided that they get the new system serviced regularly by a reputable professional!

About AAA Modern Air

AAA Modern Air has proudly served the Dania Beach community since 1969. As 6-time winners of the Angie’s List Super Service Award, they hold themselves to the highest standard of service and take every customer's safety, comfort, and satisfaction seriously. They offer free estimates, 24/7 emergency service, and a money-saving maintenance plan - so there’s no one better to call for heater and AC installation in Dania Beach, FL!

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