As the world continues to grapple with climate change, governments around the world are implementing measures to reduce carbon emissions and promote sustainable living. In the United States, the government has introduced tax credits for homeowners who make energy-efficient home improvements. The new Inflation Reduction Act article 25C, which came into effect in 2023, offers tax credits for home improvements such as qualified heat pumps and other energy improvements such as adding insulation to the home.
Heat pumps are an efficient way to heat and cool homes. They work by extracting heat from the air or ground outside and transferring it inside the home. This process is much more energy-efficient than traditional heating and cooling systems that rely on electricity or gas. Under the new Inflation Reduction Act, homeowners who install qualified heat pumps in their homes can receive a tax credit of up to 30% of the cost of the system, including installation, up to $2000.00.
Qualified Air Source Heat Pumps:
DUCTED HEAT PUMP
· HSPF ≥ 7.8
· EER2 ≥ 11.7
· SEER2 ≥ 15.2
DUCTLESS HEAT PUMP
· HSPF2 ≥ 9.0
· EER2 ≥ 12.0
· SEER2 ≥ 16.0
PACKAGED SYSTEM HEAT PUMP
· HSPF2 ≥ 7.2
· EER2 ≥ 10.6
· SEER2 ≥ 15.2
To qualify for the tax credit, the heat pump must meet certain efficiency standards set by the Department of Energy. These standards are designed to ensure that the heat pump is energy-efficient and will save the homeowner money on their energy bills. Homeowners should ensure that the heat pump they install meets these standards to be eligible for the tax credit.
Air Conditioning Equipment
Air conditioning equipment / systems also have some qualified systems available for a lesser tax credit up to $600. Below are the qualifications for AC systems:
SPLIT SYSTEM CENTRAL AIR CONDITIONER
· SEER2 ≥ 16.0
· EER2 ≥ 12.0
PACKAGED SYSTEM CENTRAL AIR CONDITIONER
· SEER ≥ 15.2
· EER ≥ 11.5
GAS, PROPANE or OIL FURNACE
· AFUE ≥ 97%
Adding Insulation to the Home
Having a properly insulated home to your climate/regions current minimum standards Is another important aspect of energy-efficient homes. Proper insulation helps to keep homes warm in the winter and cool in the summer, reducing the need for heating and cooling systems. Under the new Inflation Reduction Act, homeowners who add insulation to their homes can receive a tax credit of up to 30% of the cost of the insulation, including installation. This credit is capped at $1200.00 per year for home improvement projects such as insulation.
To qualify for the tax credit, the insulation must meet certain standards set by the Department of Energy. These standards are designed to ensure that the insulation is energy-efficient and will save the homeowner money on their energy bills. Homeowners should ensure that the insulation they install meets these standards to be eligible for the tax credit.
Learn more here:
How to Claim the Tax Credits
To claim the tax credits for qualified heat pumps and insulation, homeowners must file IRS Form 5695 with their tax return. This form is used to calculate the amount of the tax credit and must be submitted with the tax return. Homeowners should keep receipts and other documentation to prove the cost of the qualified improvements and installation.
The new Inflation Reduction Act offers tax credits for homeowners who make energy-efficient home improvements such as qualified heat pumps and adding insulation to the home. The program is effective from January 1st 2023 through 2032. There is not a lifetime limit on these tax credits meaning, you could be eligible annually for credits on qualified energy improvements. These credits are capped at $3200.00 total per year. These tax credits can help homeowners save money on their energy bills and reduce their carbon footprint. Homeowners should ensure that the improvements they make meet the standards set by the Department of Energy to be eligible for the tax credits. And as always, consult with your tax professional for further details and eligibility.
Please refer to this IRS fact sheet with more info:
Yup. It's happening again.
We as an industry were just finding normalcy and getting over R22 being phased out and replaced by R410a in new equipment. And now it's time for R410a to be phased out already. Personally, I'm actually happy with it! As I reflect on the R410a refrigerant, all the promise it once had way back in the early 2000's, and the reality of all of the issues I have personally experienced. All the countless sporadic refrigerant leaks, bad evaporator coils again and again leaking refrigerant. The countless heartbreak and financial strain experienced by our clients due to this terrible refrigerant leaking out. I personally believe, without scientific proof, but rather "the proof is in the pudding", that the R410a refrigerant has negative reactions under pressure to copper, aluminum and brazing alloys in which leaks develop. I know for a fact manufacturers have made adjustments, pivoted in manufacturing materials and alloys multiple times to combat this. I further know that they have not admitted to the effects of this refrigerant, even though their actions speak clearly especially how short lived this refrigerant has been.
Yes, I know about its Global Warming Potential and that it was always potentially slated as an interim refrigerant. I ran into my first piece of equipment with R410a which was brand new in 1999. R410a equipment was not really widely available until 2008. In fact, it wasnt until 2014 that all manufacturers HAD to use R410a in all new equipment across the board, officially phasing out R22 in 2013. Now its 2023. Thats only 9 years at full production with R410a! R22 was used for over 60 years! Now, the gas pedal is currently pressed through the floor to push R410a out the door right now. These refrigerant leaks have plagued EVERY manufacturer. None stands superior to the effects of R410a. I can confidently say that I believe R410a is the worst refrigerant ever made and widely used. It's been a terrible, hot, sweaty, tearful ride. R410a systems have been the most unreliable when compared to its predecessor R22 systems in which I have had an equal amount of experience with. In fact, I often run into R22 systems still operating in the wild with 20-30+ years of operation, never having had a refrigerant leak, that I hope the home owners NEVER see or have a R410a system, but rather, I hope they can leap frog to the next phase of refrigerants.
What makes things worse has been the global deficit of refrigerant manufacturing causing R410a and other refrigerant shortages and prices to soar. Also, the E.P.A. has created new manufacturing regulations to change how refrigerant is distributed, actually, they created a ban on disposable / non refillable cylinders to take effect in 2025. This has caused a shock wave of logistical crisis for manufacturing and distribution. So much so, some have filed a petition to the U.S. Court of Appeals to overturn the ban, however the E.P.A. apparently has not responded, causing more controversy and concern. All of these things impact industry pricing.
The R410a refrigerant phase-out is a major concern for the HVAC industry. This refrigerant has been widely used in air conditioning systems for over a decade, but due to its high global warming potential (GWP), it is being phased out in many countries. The phase-out is expected to be complete by 2025 in the European Union and by 2026 in the United States.
To replace R410a, two alternative refrigerants have emerged as viable options: R32 and R454b. Both of these refrigerants have lower GWPs than R410a, making them more environmentally friendly. However, there are some differences between the two that make R32 a better choice.
R32 has a GWP of 675, which is significantly lower than R410a's GWP of 2088. R454b has a GWP of 466, which is even lower than R32, but it is a new refrigerant and is not yet widely available. R32, on the other hand, has been used in air conditioning systems in Japan for many years and is already being used in some systems in Europe.
Another advantage of R32 is its higher energy efficiency. R32 has a higher cooling capacity than R410a, which means that air conditioning systems that use R32 can achieve the same level of cooling with less refrigerant. This can lead to lower energy consumption and lower operating costs.
R32 is also easier to handle than R454b. R32 is a single-component refrigerant, which means that it is easier to charge and service air conditioning systems that use it. R454b, on the other hand, is a blend of several different refrigerants, which can make it more difficult to handle and service.
In conclusion, the phase-out of R410a refrigerant is a necessary step to reduce greenhouse gas emissions and protect the environment. R32 and R454b are two alternative refrigerants that have lower GWPs and are more environmentally friendly. While both of these refrigerants are good options, R32 is a better choice due to its higher energy efficiency and ease of handling. R32 is already largely available globally. Unfortunately, most domestic manufacturers have decided to use the R454b refrigerant. Daikin is using R32 already and plans to continue using R32 moving forward. This means Daikin systems will have slightly lower operating costs due to the more efficient R32 refrigerant, possibly smaller equipment footprint, and servicing costs should be lower with R32 versus R454b. We are Daikin Comfort Pros so we are happy with the decision to use R32 refrigerant.