Benefits of the Inflation Reduction Act for Homeowners
Save On Heating, Air Conditioning, Plumbing & Electrical Upgrades
Have you been thinking about replacing your heating and cooling system, upgrading your water heater, or improving the electrical wiring in your home? With new savings available from the recently passed Inflation Reduction Act (IRA), now is the time! Learn about the tax credits available to homeowners in Kansas and what restrictions apply.
What Is the Inflation Reduction Act?
The IRA was signed into law in August 2022. The wide-reaching legislation aims to curb inflation by addressing taxes, healthcare, and climate initiatives. As a homeowner, the federal income tax credits for energy-efficient home improvements may interest you. A broad array of tax credits will remain available for at least the next decade.
What Home Efficiency Tax Credits Are Available?
Qualifying homeowners can claim 30% of the project cost up to a certain amount as a tax credit on their federal income tax returns unless otherwise noted below. Here’s what’s available:
- Central air conditioners: Qualifying installations are eligible for up to a $600 tax credit.
- Furnaces and boilers: High-efficiency heating systems qualify for up to $600.
- Air-source heat pumps: You may claim up to $2,000 when you install a new heat pump.
- Geothermal heat pumps: Ground-source heating and cooling systems qualify for a tax credit of up to $8,000. This will gradually decrease from 30% to 22% between 2033 and 2035.
- Biomass stoves/boilers: Heating systems that burn biomass fuel qualify for up to a $2,000 tax credit.
- Gas water heaters: Upgrade your storage or tankless water heater and get a tax credit of up to $600.
- Heat pump water heaters: These are the only type of electric water heaters that qualify for a tax credit of up to $2,000.
- Electric panel upgrades: Improvements to or replacements of electric panels, subpanels, branch circuits, or feeders may qualify for up to a $600 tax credit.
Annual Limits and Household Income Requirements
Each state administers the Inflation Reduction Act individually, so you should speak with a tax professional to make sure you’re eligible. Here are the annual limits you should know:
- The overall total limit for home efficiency tax credits in one year is $3,200.
- Any combination of home envelopment products (windows, doors, skylights, insulation, and electrical) is limited to $1,200 per year.
- Any combination of furnaces, boilers, and central air conditioners is limited to $1,200 per year.
- Any combination of air-source heat pumps, heat pump water heaters, and biomass stoves/boilers is limited to $2,000 per year.
These income requirements apply across all states:
- You qualify for 100% of the tax credit if your household income falls below 80% of your area’s median income.
- You qualify for 50% of the tax credit if your household income is between 80% and 150% of your area’s median income.
- You do not qualify for the tax credit if your household income exceeds 150% of your area’s median income.
Take Advantage of Inflation Reduction Act Savings
On Time Plumbing, Heating, Cooling & Electric is here to help you upgrade your Wichita-area home with energy-saving appliances. We specialize in high-end products from today’s most trusted brands. With nearly two decades of experience and your satisfaction guaranteed, you can count on us for a job well done!
To learn more about the Inflation Reduction Act or request a free installation estimate, call us at (316) 721-5055 or contact us online.