24 Hour Emergency Service Serving the greater Milford area

Inflation Reduction Act – Frequently Asked Questions

 

Please note that information is still forthcoming and evolving. There are several unknowns at the state level, and changes are inevitable.

 

What is the Inflation Reduction Act (IRA)?

 

To help reduce inflation, decrease carbon emissions, and more, the U.S. Government has passed the Inflation Reduction Act (IRA), which includes several tax credits for installing ENERGY STAR® certified home heating and cooling products. The IRA consists of rebates and tax credits for HVAC.

 

What is the difference between IRA rebates and tax credit offerings?

 

There are two rebate programs available. Rebates are administered at the state level and favor lower-income households. Federally funded rebates cannot be combined and are intended for immediate, point-of-sale benefit.

 

There are four tax credits available. Tax credits are federal income tax credits available to anyone with taxable income. Tax credits can be combined, and rebates can be filed for

the following calendar/tax year.

 

What are the tax credits included in the Inflation Reduction Act?

 

  • Tax Section 25C: Nonbusiness Energy Property Credit
  • Provides a tax credit to homeowners equal to 30% of installation costs for the highest efficiency tier products, up to a maximum of $600 for qualified air conditioners and furnaces and a maximum of $2,000 for qualified heat pumps.

 

  • Tax section 25D: Residential Energy Efficient Property
  • Provides a tax credit to homeowners equal to 30% of installation costs for ENERGY STAR® geothermal heat pumps until 2032. That percentage drops to 26% in 2033 and 22% in 2034.

 

  • Tax Section 45L: New Energy Efficient Home Credit
  • Provides tax credits to builders for meeting specific energy-saving criteria. The tax credits for ENERGY STAR 3.1 certified housing are $2,500 for single-family homes and $500 for multi-family units. To meet the Department of Energy’s Zero Energy Ready requirements, the tax credit increases to $5,000 for single-family and $1,000 for multi-family residences. If prevailing wage requirements are met on multi-family construction, those credits increase to $2,500 and $5,000

 

  • Tax Section 179D: Commercial Buildings Energy-Efficiency Tax Deduction
  • Provides a tax deduction for building owners to claim for installing qualifying systems in buildings.
  • Up to $14,000 maximum for all.

 

What are the rebates included in the IRA?

 

  • High-Efficiency Electric Home Rebate Program
  • Provides income-depending rebates to low to moderate-income (LMI) homeowners, including:

            ▪ Up to $8,000 for all-electric heat pumps

            ▪ Up to $4,000 for electrical load service center

            ▪ Up to $2,500 for electric wiring

 

  • HOMES Rebate
  • Provides rebates for energy efficiency upgrades that improve a single-family homes or multi-family building’s overall energy performance.

 

How should dealers leverage this opportunity?

 

Research the potential tax credits available, the efficiency requirements to earn the credit and the products that meet those criteria. Then, communicate those potential incentives in every sales presentation.

 

Do the IRA savings apply to installations done in 2020 and 2021?

 

No.

 

CEE

 

What is CEE?

 

The Consortium for Energy Efficiency (CEE) is an award-winning non-profit comprised of U.S. and Canadian energy efficiency administrators working together to accelerate the development and availability of energy-efficient products and services. CEE harmonizes program approaches in North America by supporting the production and market adoption of energy-efficient and connected equipment, installation and maintenance guidance, and facilitating program opportunities for each unique customer.

 

What are the CEE specifications and tiers?

 

The CEE equipment specifications for air conditioners, heat pumps and furnaces can be found at the following links. Currently, the direction is that the IRS will require eligibility for 25C to adhere to the highest tier below the Advanced tier for each product. It is still unclear whether the IRS will include regional distinctions, North versus South.

 

 

The highest tier refers to the tier below the “Advanced Tier” with “Tier 1” being the lowest tier if there are multiple tiers listed.

 

Is CEE the same as NEEP?

 

No.

 

In regard to CEE, what about the equipment?

 

Only M1-rated equipment is applicable.

 

LMI

 

What is LMI?

 

Low-to-Moderate Income (LMI) based on the area median income (AMI).

 

How is LMI determined and who makes that determination?

 

LMI is determined at the various levels (state, city, county level). Please refer to your local municipal office for information about your area.

 

Does a list of LMI by state exist?

 

LMI is determined at various levels (state, city, county level). Please refer to your local municipal office for information about your area.

 

Do you have a breakdown on what tax credit the homeowner will receive based on income?

 

Please refer to the TM Webinar Deck for a breakdown of the income levels required for rebate qualification.

 

What constitutes a cold climate heat pump?

 

The performance requirements for Energy Star and cold climate heat pumps can be found here.

 

25C

 

Do the heat pump and furnace count for 25C – $2,600 credit, or is it capped at $2,000?

 

Our understanding is that if both units meet the criteria, both items can be claimed. Please consult with your tax professional for more information

 

Is there a lifetime cap for a homeowner on this funding?

 

25C does not have a lifetime cap, but the program expires in 2032.

 

Do dealers need to provide a complete job breakdown for equipment, material, labor/install?

 

We are not aware of the documentation that will be required for filing. Please consult your tax professional for more information.

 

Where does the money for 25C come from?

 

25C is a federal tax credit. The rebate programs, though funded at the Federal level, are administered at the state level, and are funded separately from the IRA in the amount of $4.3 billion for both rebates.

 

Is the 25C a $3,200, one-time cap, or is it a yearly cap?

 

There is no lifetime cap, but there is an annual cap of $1,200 for qualifying products and a separate annual cap of $2,000 for heat pumps. If combining a heat pump with other qualifying products, a homeowner could receive up to $3,200. Please consult your tax professional for more information.

 

QUALIFICATIONS

 

Is the tax credit based on a system combo installation? Can you qualify with just a heat pump only installation?

 

The IRS intends for a qualifying system. If the IRS requires an AHRI certification number, then a heat pump installed would have to be installed on a system combination that meets the requirements. However, we do not know what the IRS will require upon filing.

 

Does AHRI state if a match-up is eligible for tax credit?

 

AHRI has not updated their site to match the 2023 tax requirements or the Energy Star 6.1 requirements.

 

What rating do we use if there is mixed equipment? For example, 2022 indoor unites with new 2023 heat pumps?

 

All of the requirements for 2023 installations reference M1 ratings. There currently isn’t any direction regarding M-rated equipment.

 

How does the new IRA tax credit work in homes with multiple systems?

Regardless of the number of systems, the taxpayer is limited by the annual limit. Replacement of one system would likely meet the annual limit so to maximize the tax benefit, they should subsequent systems in later years.

 

STATE REBATES / Point of Sale

 

Can Federal rebates be combined with state rebates like NYS clean heat?

 

Federal rebates cannot be combined with any other federally funded rebate program included in the IRA. We are unaware of any restrictions for other non-IRA programs.

 

Will dealers have to require financial records at point-of-sale?

 

We do not know this information at this time.

 

How are our dealers supposed to administer a POS rebate without verifying household income?

 

We do not know this information at this time; each state will determine this process.

 

Are contractors expected to float thousands of dollars on the sales until funded by the state government?

 

We do not know this information at this time; each state will determine this process.

 

TIMING

 

Will customers seeking to take advantage of the rebate programs for 2023 installations be able to retroactively apply for the rebate once their state establishes the program, even in 2024?

 

No information on this is available at this time. This will be decided at state level.

 

Are tax credits retroactive to 2022? Would 2022 installations apply similarly on an existing program?

 

2022 installations that qualified based on the 2022 criteria can be filed for tax credit in the 2023 tax year. Qualified installations occurring in 2023 need to meet the 2023 criteria and would be included in the household’s 2024 tax filings. Please consult your tax professional for more information.

 

Is there any indication from the IRS that there will be a lifetime limit on payouts under the Inflation Reduction Act, and can a consumer file separate claims for multiple systems?

 

Please consult your tax professional for more information regarding filing separate claims on multiple systems/homes owned by the consumer.

 

Talking Points

 

  1. Dealers should renew efforts in selling higher-efficiency systems by researching the potential tax credits available and the products that meet the efficiency requirements to earn the credit.
  2. Dealers should then communicate potential incentives in every sales presentation and, at the same time, consider reaching out to customers who installed qualifying systems between January 1, 2022, and December 31, 2022, and let them know they may qualify for the credit as well.

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Amazing to experience an oil to gas conversion with Onofreo! Efficient, fast, and beautiful work!!

Melissa B.

Bravo to Pat from Onofreo! He walked me through all the service needs for my hot water heater and heating ducts & vents. An overall fantastic experience and I will be calling Onofreo HCS for all future HVAC needs. Thank you 🙂

Carmen F.

I had an issue with hot water system. They were very fast to send someone out on the same day to diagnose the problem and quickly got in parts the next day to complete the job. Kept me closely updated on when a repair person would come to my place. Very happy I can shower again with hot water!

Monkol L.

They were both very professional, informative and very neat and went out of their way to any other issues. I highly recommend them and hope their service lives up to the same.

John T.

Just amazing people even helped me with rebate paperwork from my electric company.Will use them again and so should everyone else.

Ralph S.

The install was well planned and started on scheduled date. It required multiple condensers and 4 wall mounted units. The team was friendly, professional and worked non-stop through two very hot days directly in the sun. The install finished ahead of schedule. Cabling is very neat. Team cleaned up when finished. So, start to finish just as promised. The Mitsubishi units work very well and are extremely quiet. An overall A+!

Jeffery B.

Excellent service and quick response. Also had what I thought was a leaking hot water heater but turned out something far less expensive. They responded back quickly and had everything finalized within 2 hours of my initial contact with their office

James V.

Onofreo Home Comfort Systems LLC installed a new ductless, mini-split air conditioning system in our home. Very completive pricing when compared with other area contractors.

Nick N.

We recently had to replace our central Air Conditioning and received estimate from various HVAC specialists, including the one we currently have a service contract with. Shane, the sales constant, was by far the most professional, patient, kind, honest, and thorough person that I met with.

Christine K.

Anthony called prior to the visit. Arrived on time & found a capacitor was bad on our compressor. He went on to check the entire system to make sure it was running right, without me having to ask. Very friendly & explained everything he was doing. Kelly was also very pleasant to deal with on the phone.

Wayne S.

Mark and his team are the best. They are honest, transparent, hard working, professional and punctual. They answer all of your questions, even the dumb ones, and I had plenty of those. They removed my antique furnace and installed a complete heating system in 2 days as promised as well as a hot water heater on an emergency basis. They also wear masks. Call them. You won’t be disappointed.

Elaine M.

I had Onofreo HCS install a new Hydro-air system last year to replace my 35 year old system that kept giving me trouble – Mark, his office staff, and his techs were prompt, professional, and clean. Mark showed up to do his estimate, I got the proposal signed, they pulled the permit, dropped off a check, and in three days I had a brand new system installed. I knew what was going on every step. The install looks great and they provided free cleaning and tune up service afterward. I have also referred my mom to them and she was thrilled with the service. I would highly recommend anyone who needs maintenance or a new system to Onofreo HCS.

Eric P.

We just had a ductless split unit system installed in 4 rooms of our house. The people at Onofreo are amazing to work with, from the owner Mark, to the office staff to the guys coming out and doing the work. The install happened much quicker than I anticipated and they were SO clean, I would have never known they were in my house cutting into walls, etc. The system itself is awesome – very quiet and cools down the house super quick. When Tom came for the consult, he told me I’d never want to leave the house again and he was right. Best thing we ever did! Thank you Onofreo!

Heather D.

Had to change the zoning board, wiring to HVAC and thermostats on an 30 year old system . Responsive, on time arrival, fair pricing – true professionals. Was absolute pleasure to see how their engineer arrived on time, communicated everything he has done, and the work performed. Will definitely contact them again for anything HVAC related.

P K

Onofreo is an amazing company That is represented by excellent products and professional staff. When I first called them they were extremely responsive to my needs and took care of the initial concerns that I had with an old air conditioning system.

John S.

Anthony, Mark, and Kelly have helped install, fix and maintain our furnace and AC units for many years now — they are the best, and yes, we have tried the rest. But we will always call Onofreo from now on. Excellent work, done fast and reasonable rates — great people too.

John B.

This company was an absolute joy to deal with helping me switch from oil to gas and taking care of every step of the process, from sales to installation to dealing with gas company. Kelly is a gem. Can not recommend enough!

Terri M.

In short, I could not be any more pleased and satisfied. You started the process with an excellent presentation, great salesmanship skills, and more than enough knowledge to allay any concerns I had. With your guidance, I believe we put together a system that will continue to meet my needs for years to come. I am particularly impressed with the Rudd heat pump water heater. But for your recommendation, I might have stuck with the standard 50 year old technology and heated water with gas or electric. Now that I have seen the heat pump water heater in action, going with the old technology would have been a big mistake. Thank you.

Scott O.

Onofreo has proven themselves yet again to be the best in the business. My wife and I went to them a second time, this time to replace our Central AC unit. First of all, they came right out to inspect, then they gave us a price that was much lower than I had expected. The install happened very quickly and everything is perfect. Mark and his team are absolutely wonderful and I can’t recommend them highly enough. Truly a first class company all around. If you need work done, this is where you should start. Thank you for another great experience!

Joe B.

Everyone in the office I spoke with was so friendly and responsive. They called to notify me that the technician was running late, so I wasn’t sitting around waiting.
Our Technician, Giovanni, was excellent.

Ellen L.

The installation was installed neatly on the date scheduled and at a terrific price. We are completely happy with the professionally executed work.

Michael L.

The technician was very polite. He assessed the situation quickly but thoroughly and provided a honest diagnoses. He told me exactly what was wrong and needed to be done and he performed the job well because everything is working perfectly. I will call them for my future needs and recommend them if you do not have a HVAC provider.

Theandra T.

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