The Inflation Reduction Act (IRA) contains several components, including the High Efficiency Electric Home Rebate Act (HEEHRA). This important legislation could have far-reaching impacts on homeowners in the United States. Here, we look at HEEHRA to understand what it is and how it may benefit homeowners.
What Is The High Efficiency Electric Home Rebate Act (HEEHRA)?
At its core, HEEHRA is designed to promote the installation of more efficient electric heating systems in homes throughout America. It does this by providing rebates and tax credits to eligible households. In addition, as part of HEEHRA, states will be required to execute programs starting in Spring 2023 that allow point-of-sale heat pump rebates when installing qualifying equipment.
Who Qualifies For Maximum Rebates And Tax Credits?
To qualify for maximum rebates and tax credits under the High Efficiency Electric Home Rebate Act, the household must meet certain income requirements.
Low-income households are those whose incomes are below 80% of their area’s median income level.
Moderate-income households are those whose incomes fall between 80% and 120% of their area’s median income level.
Fortunately, Fannie Mae has a tool that can help determine your area’s median income level so you know if you qualify as low or moderate income when applying for the program.
How Much Are The High Efficiency Electric Home Rebate ActRebates And Tax Credits?
The amount of rebate or tax credit available depends on both your household income level and the type of heat pump you choose to install. Heat pumps come in three levels: basic (Level 1), mid-efficiency (Level 2), and high efficiency (Level 3).
Low-income households can receive the following rebates:
- up to $2,000 for Level 1 heat pumps
- up to $3,000 for Level 2 heat pumps
- up to $5,000 for Level 3 heat pumps
Meanwhile, moderate-income households can receive the following:
- up to $1500 for Level 1 heat pumps
- up to $2,000 for Level 2 heat pumps
- up to $4,000 for Level 3 heat pumps
Additionally, higher-earning households who do not qualify as low or moderate may still be eligible for a federal tax credit worth a maximum of 10 percent off the cost price of their new system if they choose a qualifying model from one of the three efficiency levels listed above.
Provisions for home electrification have recently been added to HEERA to help low to moderate income households modernize their homes.
Home electrification is the process of converting various systems, appliances, and energy sources in a household to run on electricity instead of other forms of energy, such as fossil fuels. The primary goal of home electrification is to reduce greenhouse gas emissions, improve energy efficiency, and promote the use of clean, renewable energy sources like solar and wind power.
Common examples of home electrification include:
- Replacing gas-powered heating systems with electric heat pumps or electric resistance heating.
- Switching from gas-powered water heaters to electric water heaters.
- Upgrading from gas stoves to induction or electric stoves.
- Installing electric vehicle (EV) charging stations for electric cars.
The High Efficiency Electric Home Rebate Act (HEEHRA) within the Inflation Reduction Act promises substantial benefits toward improving our nation’s energy efficiency through installing better electric home heating systems.
Eligible low and moderate-income owners can receive generous rebates and tax credits depending on their choice of system; while higher earners may still be able to access significant savings through a federal tax credit program.
We will keep you updated as new details emerge about the Kentucky and Indiana incentives.
Contact us today for more information.