New HVAC Tax Credits and Rebates: What Pros Need To Know


H1: New HVAC Tax Credits & Rebates

M1. The IRA tax credits. HEERA. These are all new regulations, rebates and requirements for the HVAC industry. Major changes took effect on Jan. 1, 2023, and more may be coming down the pike. Why are they important? What do they mean for HVAC pros?

Here's everything you need to know about these new regulations affecting our industry.

H2: M1

Referred to as "M1," the changes went into effect Jan. 1, 2023, establishing new energy-efficiency standards for AC and heat pump equipment here in the United States. It impacts HVAC manufacturers, installers and ultimately, homeowners. These changes are sunsetting efficiency standards SEER, EER and HSPF, in favor of new standards: SEER2, EER2 and HSPF2. In simple terms, the efficiency standards were bumped up. It's an effort by the Department of Energy to continue its mission of reducing energy consumption by making AC and HP units more efficient.

These standards vary by the region of the country where the equipment is sold and used, and enforcement varies, too. For our region, the new standards in effect since Jan. 1, 2023, are:

Split system AC: Less than 45k BTU: 13.4 SEER2, 11.7 EER2. Greater than 45k BTU: 13.8 SEER2, 11.2 EER2.

Single-packaged AC: 13.4 SEER2, 10.6 EER2.

Split system heat pumps: 14.3 SEER2, 7.4 HSPF2.

Single-packaged heat pumps: 13.4 SEER2, 6.7 HSPF2.

A word about enforcement. HVAC pros in the Northern region, unlike some other parts of the country, may install units that were manufactured before Jan. 1, 2023, even if they do not meet the new standards. New units must meet the standards.

Bottom line for HVAC pros: Make sure you know the energy standards of units you're purchasing. At Goodin, we've got your back. We know all about these new regulations and are making sure the units we sell are up to current and future standards.

IRA Tax Credits

The Inflation Reduction Act of 2022, signed into law last year, has now taken effect. The goal is to alleviate inflation, lower prescription drug prices and other measures, including lowering our country's carbon emissions. It's the largest legislation ever to address climate change, and that means huge investments in clean energy sources. Part of it offers rebates and tax incentives of up to $2,000 per year to homeowners who install qualified heat pumps. But, as with everything tied in governmental red tape, there are several exceptions and rules, including:

  • Improvements must be made to an existing home. New home construction does not qualify.
  • If the home is used solely as a business, the credit doesn't apply.
  • Electric or natural gas heat pumps qualify, as do electric or natural gas heat pump water heaters.


The High-Efficiency Electric Home Rebate Act is a part of the Inflation Reduction Act. It's a 10-year rebate program that is intended to help low- to moderate-income homeowners get more energy efficient. HEEHRA covers 100% of replacement of old energy hog appliances with new, more efficient ones, including:

  • Electric heat pumps
  • Heat pump water heater
  • Condensing electric dryers
  • Electric range
  • Breaker boxes
  • Electric wiring upgrades

The amounts vary for each of those appliances, but the main thing to know is, the rebates are instant, given at the point of sale. This isn't something people have to write off on their taxes. An important thing to know: Households qualify based on the median income level in their area. They need to earn less than 80% of the median income to qualify for most of the rebates. So, if an area's median household income is $100,000 per year, qualifying households can earn no more than $80,000. However, there are exceptions to this, too. Households may earn 80% to 150% of their area's median income to qualify for a 50% rebate on electrification upgrades.

But how do they find out their area's median income? A very easy way to do this is to use Fannie Mae's Area Median Income Lookup Tool. Pop the address into the tool's search field, and it will give you not only the area median income, but 100%, 80% and 50% figures, so your homeowner won't have to do the math.

However ... as with everything connected to the government, there is some red tape involved. As of this writing, the rebates are out there, the federal government has allocated the funds for the rebates to individual states, but no states in the country have started doling out those funds yet. That means your customers can apply for the rebates, but those funds aren't going to be immediately available.

Bottom line about all of these changes: Goodin has been HVAC's local source of supply for generations. We have your back, we're up on these new rules and regulations and we can help you navigate through all of this red tape, and also help you help your customers get the rebates coming to them.

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