Inflation Reduction Act: Heat Pump Rebates in Texas
On August 16, 2022, President Joe Biden signed the Inflation Reduction Act (IRA) into law. Within the IRA are some of the most considerable pieces of federal legislation addressing climate change. The act invests $369 billion into clean energy sources and technologies, including tax incentives for homeowners who install heat pumps.
For Texas families, some residents may be eligible for a free heat pump in 2023, depending on their location and available rebates. Read on to discover how the IRA may affect your home HVAC plans for 2023.
What Is the Inflation Reduction Act?
One of the most significant parts of the Inflation Reduction Act is its targeted legislation tackling the “climate crisis.” The act claims it will reduce energy costs for households and businesses across Texas by:
- Offering rebates on energy-efficient appliance installations for heat pumps, water heaters, clothes dryers, stoves, and ovens
- Offering rebates for households to make energy-efficient repairs and improvements
- Providing tax credits covering 30% of residential solar panel and battery storage system installation
- Providing tax credits covering 30% of the costs of community solar projects owned by local businesses, with bonus credits of 20% for affordable housing projects and 10% for projects in low-income communities
- Offering grants to help state and local governments conform to the latest energy building codes
How Will This Affect Texas Families?
The most significant affect the IRA will have will be on the cost of initial heat pump installation for Texas families. Within the IRA is the High-Efficiency Electric Home Rebate Act (HEEHRA) — the official name for the IRA’s heat pump incentive program. The program is designed to offer special rebates on any heat pumps up to $8,000. Rebates are automatically deducted from the installation price at the point of sale without needing to mail in for a refund.
It’s important to note that the IRA places strict requirements on the efficiency standards that heat pumps must meet to qualify for savings under the HEEHRA. According to the IRA, heat pumps eligible for tax credits must “meet or exceed the highest efficiency tier” outlined by the Consortium for Energy Efficiency (CEE). Currently, the CEE’s highest efficiency tiers for heat pumps are much more stringent than those set by ENERGY STAR®. Fewer than 10% of heat pumps in North America currently meet the CEE’s highest standard for residential HVAC.
Additionally, many heat pumps that meet the CEE’s highest efficiency standards are at least $3,000 more expensive than the maximum allowed under the IRA. That means homeowners may need to seek additional financing to cover the total cost of heat pump installation, even if they can reap the maximum rebate.
What Are the Available Rebates for Heat Pumps?
Much of the HEEHRA rebates are allotted to homeowners based on income level. The following table outlines what rebates homeowners can expect to receive based on the IRA heat pump rebate guidance:
|Income Level||Maximum Rebate|
80% below the area’s median income
100% coverage on heat pump up to $8,000
81% to 150% of the area’s median income
50% coverage on heat pump up to $8,000
150%+ of the area’s median income
30% coverage on heat pump up to $8,000
What Changes Can I Make To Get the Rebate?
Because the IRA hasn’t officially taken effect yet, no information is available on how to take advantage of the heat pump rebate. The Texas state government will execute the HEEHRA rebates, and the Department of Energy is expected to make an announcement with guidelines in spring 2023.
Choose Total Air & Heat
If you’re looking to install a heat pump in your Texas home, Total Air & Heat can help. Our team offers a wide variety of top-quality heat pump systems from the industry’s most trusted manufacturers. We also offer many financing solutions to help families afford the installation cost.
Contact us at 972-881-0020 to schedule heat pump installation in Texas today!