Energy Efficiency Tax Credits and Rebates -- "free Obamacare" for your home

Investment Analysis Clubs Macro Economic Trends and Risks
1

During the heat dome we had in the Pacific NW 2 weeks ago my HVAC system failed. Since it costs a fortune to have a HVAC guy come to the house, I was determined the fix the problem myself. I bought a portable AC unit for emergency use and waited for the heat dome to pass. My furnace is in the attic and it’s hot up there. I diagnosed the problem to a failure in a $7 capacitor and I should have that part by Tuesday – immediate problem solved.

My HVAC system is 18 years old and at the end of its service life, so I decided to see if the Inflation Reduction Act passed in November 2022 had any tax savings or rebates for me to mine.

There is currently a 30% Federal Tax credit on the cost of installing a qualified high-efficiency heat pump, with a limit of $2,000 to the credit. You can do the work yourself to save on the labor cost if you’re handy.

Of greater interest is an $8,000 low-to-moderate income rebate program that is administered by the states. You need an income less than 80% of your state’s median household income to qualify for the full $8,000. You can get a $4,000 rebate on an income of 80% to 150% of your states median. That 80% figure looks to be about $10,000/yr above the income that would qualify you for “free Obamacare” in my zip code. If you’re a retiree with the ability to manage your income, there could be a free HVAC system in your future. (Note: It appears that you’ll need to have a qualified contractor install the HVAC system to get the $8,000 rebate – no DIY.)

https://moneywise.com/taxes/heat-pump-tax-credit-rebate

The administrative details of the $8,000 heat pump rebate program won’t be released until late 2023. I’m delaying my HVAC upgrade project until then.

intercst

6 Likes
2

All in the timing, we upgraded our furnace system (Trane) to add a heat pump air conditioning unit last year. Did not pay attention, or notice the rebate programs, were just glad to get it in, and done well by our favorite heating & A/C guy… Then I began looking found the unit didn’t have an Energy Star rating, and in the end it didn’t qualify for any of the minor rebates in affect at the time. We should have held on into 2023 when all the rules changed, but hindsight doesn’t help.

Anyway, we went to the heat pump, looking to the future, less gas usage, no need for A/C other than maybe a couple weeks or so on the year here in Sonoma County, CA… Glad we did it, but we could have waited… Should have…

2 Likes
3

My a/c was 36 years old, when I noticed no cooling action. Called the service guy out. He diagnosed the same cap. Installed a spare he had on his truck. The compressor would start, but the current drain was sky high, and the breaker would trip. Furnace worked perfectly, but it was 20 years old. $8,000 later, new 95% efficient furnace (vs 80% for the old one) and a much higher efficiency a/c. The furnace got me a rebate from the utility company that equaled the upcharge for the 95%, over an 80% efficient furnace.

The utility company would have given me a rebate for the extra efficient a/c too, but the HVAC company botched it’s calculations and the system they installed fell a hair short of the 16 SEER that would have gotten the rebate, so the company cut the price by the same amount.

Steve

1 Like