Heat Pump Tax Credit - Best Explanation I have seen

[peakbagger]

Buying a Heat Pump Could Get You Thousands in Federal Tax Credits and State Rebates

The Inflation Reduction Act includes incentives for HVAC upgradesBy Liam McCabeThe Inflation Reduction Act is packed with provisions to incentivize homeowners to make energy-efficiency upgrades t...

www.yahoo.com

I expect a lot of folks will be looking at upgrades or new installs

 

[EbS-P]

Good article.

My question is what is the “highest tier” to qualify. The link sent me to a page that wasn’t very clear.

The state programs are going to be very interesting to watch how those are managed and the differences between the states. Again I imagine the political leanings of individual states will have effects on the state run programs which.

Refunds at point of purchase would be great.

 

[Brian26]

A lot of the New England states already have their own very generous rebates funded through charges on everyone's electric and gas bills. Here in CT there is already a state rebate of $1500 ton with a max of $10k. I think MA, RI, and Maine also have $1500 a ton or more available in state rebates. If you can put these federal rebates on top of the state ones you could almost cover the the whole cost of the install.

Are self installed diy systems eligible? That was the downfall of many of the state rebates where you had to use a contractor. Those contractors then seem to jack the price up because of the rebate.

 

[The Toasted One]

Buying a Heat Pump Could Get You Thousands in Federal Tax Credits and State Rebates

The Inflation Reduction Act includes incentives for HVAC upgradesBy Liam McCabeThe Inflation Reduction Act is packed with provisions to incentivize homeowners to make energy-efficiency upgrades t...

www.yahoo.com

I expect a lot of folks will be looking at upgrades or new installs

I started getting into the heat pump craze 3 years ago. My oil furnace used to heat the hor water and burned about $30/month just for hot water, and that as @ $250/gal. Bought a RHEEM Performance Platinum electric heat pump water heater from Home Depot. It started out @ $1999, then got 10% off with a coupon, Then got $400 or so from the government and $700 or so from my utility company and another $300 from NJ rebates. Not sure if these are the exact numbers but in the end it cost me $100. Did the install myself so no labor. My average hot water costs is about $6/month and I get free AC in the basement.\

I'm just now looking into a 4-5 zone mini-split system and seeing where the cost and rebates are going. I'll continue to heat the 1st floor from the pellet stove in the basement but hope to have seperate zones for heat/AC in the bedrooms.

 

[woodgeek]

Did I read it right.... the big state rebates are means-tested, while the smaller fed rebates are not?

 

[tlc1976]

I started getting into the heat pump craze 3 years ago. My oil furnace used to heat the hor water and burned about $30/month just for hot water, and that as @ $250/gal. Bought a RHEEM Performance Platinum electric heat pump water heater from Home Depot. It started out @ $1999, then got 10% off with a coupon, Then got $400 or so from the government and $700 or so from my utility company and another $300 from NJ rebates. Not sure if these are the exact numbers but in the end it cost me $100. Did the install myself so no labor. My average hot water costs is about $6/month and I get free AC in the basement.\

I'm just now looking into a 4-5 zone mini-split system and seeing where the cost and rebates are going. I'll continue to heat the 1st floor from the pellet stove in the basement but hope to have seperate zones for heat/AC in the bedrooms.

Free AC in the basement. That’d be something if they could take that cold air and use it as a refrigerator or freezer.

 

[EbS-P]

Free AC in the basement. That’d be something if they could take that cold air and use it as a refrigerator or freezer.

Or use the exhausted heat from your fridge to heat water. Probably need a a lot more heat that a fridge though.
It’s nice to have an extra cold room in the house in the summer.

 

[stoveliker]

Here they seemed to have combined them:

Cold Climate Integrated Heat Pump... | ORNL

This paper introduces development of a residential air-source integrated heat pump for cold climates (CCIHP). The heat pump is multi-functional to meet all the home comfort demands, including space cooling, space heating, domestic water heating and energy storage. The CCIHP is an ideal solution...

www.ornl.gov

 

[Tithis]

Sounds like they might try to make it work for installs in 2022.

That would certainly be a nice bonus. We installed a whole house unit in March in a dual fuel configuration after our furnace died. Already got around $4,800 from the MassSave program for it (with $1k coming for the furnace) but I certainly wouldn't say no to a bit more.

 

[peakbagger]

The problem I see is that the regs seem to point to the rebate only applying to the top tier in efficiency ratings by a specific body that is not yet certifying actual model numbers, thus unless that changes, anyone buying a unit is going to have tough time getting the credit unless they can prove the unit was certified after the fact. The entire industry has to come out with new units and most likely model numbers for the post HFC phase out so no guarantees.

The rebates are tied to income so someone in the higher income brackets may be better off buying a close out HFC unit and installing it now rather than waiting as my guess is the new units that use a slightly flammable non HFC is going to cost more. Typically, when these rebate programs are passed the dealers raise prices to eat up all or some large portion of the rebate. I see a lot of demand and that will also keep prices high for a couple of years.

I am considering replacing an older small minisplit AC only unit with HFC unit for those reasons.

 

[EbS-P]

Sounds like they might try to make it work for installs in 2022.

That

None of the rules or standards for qualifying rules are written yet. One they are we will know more but I’m doubtful the IRS will have their systems updated by the opening for tax filing. I could be wrong.

 

[EbS-P]

The problem I see is that the regs seem to point to the rebate only applying to the top tier in efficiency ratings by a specific body that is not yet certifying actual model numbers, thus unless that changes, anyone buying a unit is going to have tough time getting the credit unless they can prove the unit was certified after the fact. The entire industry has to come out with new units and most likely model numbers for the post HFC phase out so no guarantees.

The rebates are tied to income so someone in the higher income brackets may be better off buying a close out HFC unit and installing it now rather than waiting as my guess is the new units that use a slightly flammable non HFC is going to cost more. Typically, when these rebate programs are passed the dealers raise prices to eat up all or some large portion of the rebate. I see a lot of demand and that will also keep prices high for a couple of years.

I am considering replacing an older small minisplit AC only unit with HFC unit for those reasons.

The phaseout will push a lot of new units into service. No more import or production of R22. R410a is next. I’m sure there is lots of in storage but if you have a leaky older system you probably will opt to replace. Buy stock in hvac manufactures!

 

[Tithis]

None of the rules or standards for qualifying rules are written yet. One they are we will know more but I’m doubtful the IRS will have their systems updated by the opening for tax filing. I could be wrong.

I looked over some of the bill and it looks like the main bits that are retroactive are the rates for the solar/wind/geothermal/stove credit. Looks like any installs done this year will get the new 30% credit rather than 26%.

Found a good graphic going over the new rebates

We were looking to replace our 10 year old propane water heater with a heatpump in the next year, not sure how this would combine with the Mass Save programs at sale rebate for them.

We also wanted to get our service and electric panel upgraded from our current 100A, glad to see some rebates have been included for that. Might try to get it done with the water heater to future proof us a bit for solar and such.

 

[begreen]

Buying a Heat Pump Could Get You Thousands in Federal Tax Credits and State Rebates

The Inflation Reduction Act includes incentives for HVAC upgradesBy Liam McCabeThe Inflation Reduction Act is packed with provisions to incentivize homeowners to make energy-efficiency upgrades t...

www.yahoo.com

I expect a lot of folks will be looking at upgrades or new installs

Watching this, but it will take a bit for state programs to get in place. Once combined, they are a great incentive. This could be a boon for retirees and people on a fixed income. Consumer Reports has good summaries of other benefit programs on EVs and Solar on their website.

Product Reviews and Ratings

Get unbiased ratings and reviews for 9,000+ products and services from Consumer Reports, plus trusted advice and in-depth reporting on what matters most.

www.consumerreports.org

 

[Brian26]

Anyone using fossil fuels to heat water should take full advantage of the $1750 rebate for heat pump water water heaters.

Here is my monthly hot water usage from a 9 year old GE Geospring hpwh. The numbers speak for themselves.

I have solar but even if I bought the electricity month to date it would have cost me $7.50 this month for hot water. And that's in CT with some of the most expensive electricity in the US. Washington state for example with their cheap hydroelectric would have cost me less than$3.


The savings are astronomical compared to fossil fuels here in New England. My mother has oil for hot water and burned 2 gallons of oil ($10) in 3 days as a comparison.

 

[drewmo]

As an estimator for a company that installs heat pumps, it's killing me that we don't know more about what this incentive will look like and if installs happening now (or in this year for that matter) would qualify. My best advice for those looking to install a heat pump would be to get in queue now, before it goes totally nuts and it's a year or more before your contractor can get to you. By getting in line now, hopefully you can get an install in the next 3-4 months, during which time the whole incentive administration piece should be worked out.

 

[stoveliker]

On the other hand, it's going to be the same until 2030, so why the hurry....

 

[drewmo]

On the other hand, it's going to be the same until 2030, so why the hurry....

Ha! There's provisions in the bill to help companies train and employ installers. That will help, you'd hope, if you can find workes. But supply chain has been hit or miss.

 

[NewGuy132]

This would be great if I could combine it with the MassSave rebates($10k off and a 0% loan for 7 years). Although it looks like we earn too much to really get much for savings. It would have been great timing as I just had someone out for a quote Saturday. Its's looking like 3 units to cover the entire house.

 

[EbS-P]

Any guess if 410a units are going to be covered? I could see someone saying since they are on phase out not to allow those to qualify.

 

[Nhdigger]

I keep finding mixed information for systems that were installed in 2022. Do we miss out on the Fed tax credit and only get the current $300 or does it go to the 30% maxed at $2k?

Thanks

 

[begreen]

According to Consumer's Reports, heat pump systems installed in 2022 only qualify for the $300 credit. Systems installed after 1/1/2023 get the larger new tax credit.

Buying a Heat Pump Could Get You Thousands in Federal Tax Credits and State Rebates

Consumer Reports explains the tax credits and rebates available through the Inflation Reduction Act for the purchase of a heat pump.

www.consumerreports.org

 

[Nhdigger]

Thats a real pisser, ours just got installed......a few month before schedule and I wasnt thinking

 

[begreen]

We are considering an upgrade to our 16 yr old system, but definitely will be waiting until next year.

 

[peakbagger]

Sure looks like its best to wait until next year before buying https://cleantechnica.com/2022/10/18/how-the-inflation-reduction-act-may-impact-heat-pump-standards/