What is the Inflation Reduction Act for HVAC?

The topic of inflation has been on the minds of many in recent years. In the aftermath of the pandemic, inflation has reached lofty levels, and many people are feeling the strain as a result. One of the biggest attempts to regain control over this issue has been the Inflation Reduction Act, which includes provisions that impact the HVAC industry. This article will go over the basics of what you need to know to take advantage of the programs featured in this bill.


If you have been thinking about HVAC replacement, or if you just need some A/C repair work performed, Berico should be your first choice. A known leader in the industry made up of a team of trusted professionals, you can be sure that Berico will exceed your expectations at every turn. Call today to get started.


A Great Opportunity

Simply put, the Inflation Reduction Act represents a great opportunity for homeowners to have new HVAC equipment installed in their homes at a discount. That discount comes in the form of a tax credit – more on that in a moment – and it will effectively lower the cost of upgrading to a new HVAC system.


So, for example, if you have an aging air conditioner serving your home and you have been thinking about upgrading for a while, doing it while this tax credit program is in effect makes a lot of sense. Not only do you get the improved performance and efficiency of a new system, but you get it at a lower price than would be able to get otherwise.


An Eye on Efficiency

So, why would the government want to subsidize the purchase of new HVAC equipment for countless Americans? Well, there can be plenty of complex economic arguments to be made here, but that’s outside the scope of this post. At least part of the motivation comes down to environmental concerns, however, as new HVAC equipment is going to be more efficient than HVAC equipment that was produced in years gone by.


In order to qualify for this program, the equipment you purchase needs to be ENERGY STAR-certified. Fortunately, it’s not hard to find such equipment, so you won’t have to pick from a narrow set of options to check that box – it will be easy to satisfy that requirement while getting a great system that can serve your home well for many years to come.


The Basics of the Credit

The part of the Inflation Reduction Act that is relevant to HVAC equipment is Tax Section 25C. In this section, you’ll find information about how much of a credit is available to those who have new, efficient HVAC equipment installed. As this is a tax issue, there are plenty of complicating factors and variables, but the basic concept is that you will receive a tax credit when you have qualifying equipment installed in your home.


Just how much of a credit is available? You can receive a credit of as much as 30% of the installation cost of HVAC equipment that meets the standards for the highest efficiency tier. That 30% mark is capped at $600 per air conditioner and furnace, and it is capped at $2,000 for heat pumps. If you decided to have a new air conditioner as well as a new furnace installed, you could claim the credit for both of those items.


It’s always important to point out that everyone’s tax situation is unique. While this credit is relatively straightforward by tax standards, you will still want to make sure you qualify and that everything you are purchasing fits with the requirements of the tax code. Take some time to read through the finer points if you plan on claiming this credit, or talk to your accountant just to be sure you are on the right track. It’s better to do some extra homework in advance than to find out later that you won’t actually be able to get the credit you were planning on receiving.


Upgrading Has Many Benefits

For some people, it’s hard to come to the decision to upgrade their HVAC equipment when the old system is technically still working. After all, this is a big expense, even with a tax credit, so it can be hard to make the choice to go ahead and schedule the installation of a replacement HVAC unit. However, if you take a moment to look at some of the many benefits that can come with this project, you might start to see it as an easier choice.


  • Better performance. Simply put, aging HVAC equipment doesn’t work as well as newer stuff. Even if you have maintained your old system properly over the years, time is going to take a toll and it eventually won’t work quite as well as it once did. By upgrading now, you’ll be able to enjoy better performance immediately, such as more even heating or cooling throughout your house.


  • Lower utility bills. Along with the savings that will come in the form of a tax credit, there is also the potential for lower monthly utility bills to consider. A new system will be more efficient than the older units, and as a result, you should find yourself paying less for energy month after month. These savings might seem modest at first, but they’ll just keep coming until they add up to a notable sum.
  • It might be quieter. This point will depend on how your current system is working and exactly how old it is, but you might find that new HVAC equipment runs quite a bit quieter than what you are used to, and often it takes up much less space, which is particularly nice if the system is in a closet or utility room that then has some extra space. Who doesn’t need more storage space?


Get Started Today

If you have been needing new HVAC equipment but are worried about the A/C replacement cost for your home, getting help from the Inflation Reduction Act is a great opportunity. Berico always offers transparent HVAC pricing, so you can reach out to the team today to get a quote on a system that will serve you well for years to come.