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Phoenix Homeowners: Save on Heat Pumps and HVAC Upgrades with the Inflation Reduction Act

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The weather in Phoenix is already warming up, so if you’ve been considering upgrading your home’s cooling system and are looking at heat pumps, now is the time! The Inflation Reduction Act (IRA) can help you make the upgrades to make your home more energy efficient, while also providing you with significant tax credits and rebates that will save you money.

The tax and rebate incentives provided by the IRA will help Phoenix homeowners:

  • save money on monthly energy bills
  • receive huge rebates and tax incentives
  • have a cleaner, healthier indoor air environment

When you replace your old, outdated, and inefficient heating and cooling systems and equipment, you can reduce the energy you’re using and save money in the long run. And now the IRA makes it more affordable to update your HVAC system and heat pumps. The pros at ACE Home Services can help you decide if this is a good option for you. Give us a call at 602-517-0183.

HVAC and heat pump savings

It may seem counterintuitive, but a heat pump can save you a good amount of money compared a furnace/air conditioner combination system—around $10,000 over 15 years on average. If you currently use electric (baseboard) heat, an electric furnace, propane, or fuel oil, your savings are closer to $15,000 over 15 years when switching to a heat pump.

The Inflation Reduction Act includes certain tax credits and rebates that can save you money. Tax credits are available now (to be applied when you file next year) and rebates will be available on equipment purchases and installation later this year.

Here are the tax credits that you may qualify for:

Inflation Reduction Act 25C tax rebate table
Inflation Reduction Act 25C tax rebate table

Heat Pumps

Heat pumps are extremely energy efficient compared to natural gas furnace and air conditioners because they essentially replace and upgrade the two systems. A heat pump system has some advantages over other types of heating and cooling systems.

  • Saves space: Heat pump is one unit that provides both warm and cool air, So not only do you only have to purchase and one unit instead of two, but it also takes up less space.
  • Maintenance: Heat pumps only require a system check once a year. While this check can be done by the homeowner, we recommend having a professional HVAC tech from ACE Home Services to do your inspection. Give us a call at 602-517-0183.
  • Runs cleaner: Because heat pumps do not run on fossil fuels, no fumes are released into the air. This reduces your carbon footprint, which in turn helps the environment. There is also no need to purchases natural gas, whether propane or another fuel type, so you save money.

Air Conditioner

If you don’t go with a heat pump, you can see significant savings on your energy bill when you opt for a new, energy-efficient air conditioner, which also reduces carbon pollution. Ask the HVAC pros at ACE Home Services what they recommend for homeowners in Phoenix, AZ. Call us at 602-517-0183.


Depending on the structure of your home, a heat pump may not make sense for you. In this case, an energy efficient furnace may be the right solution. If you are in the market for a furnace upgrade, you can save up to $600 with the tax credits included in the Inflation Reduction Act. Give ACE Home Services a call at 602-517-0183 to have a pro assess your HVAC system and make recommendations.

Heat Pump and HVAC 25C Tax Credits from the IRA

Energy Efficiency Home Improvement 25C Tax Credit

The IRA expanded and extended the existing 25C tax credit, also called the Energy Efficiency Home Improvement Tax Credit. The Inflation Reduction Act increases the 25C tax credit to cover 30% of the total cost of new energy efficient qualified systems, and went into effect on January 1, 2023 for all homeowners.

This means that Phoenix homeowners will be able to deduct 30% of the total cost of a heat pump installation or HVAC upgrade, with a total cap of $3,200 in tax credits. Contact the HVAC pros at ACE Home Services for heat pump installation or upgrade advice.

Home Owner Managing Energy Savings (HOMES) Whole House Rebates (The HOMES Rebate Program)

In addition to the 25C program, the Inflation Reduction Act also offers the HOMES rebate. Available later this year, the HOMES rebate is a whole-home, performance-based rebate, meaning that the more energy you save by making upgrades, the more money you get back.

All Phoenix homeowners qualify for the HOMES Rebate, with higher rebate rates for low- and medium-income households. Rebates are provided based on the percentage of energy you save. This program is capped at $8,000 for low to middle income households earning less than 80% of area median income who cut energy use by 35%.

NOTE: The HOMES rebate cannot be combined with the HEEHRA Rebates, but can be combined with the Inflation Reduction Act tax credits.

Contact ACE Home Services today to schedule an appointment and see how you can save money with a heat pump or other HVAC upgrade and take advantage of the HOMES rebate.

High-Efficiency Electric Home Rebate Act (HEEHRA)

The High-Efficiency Electric Home Rebate Act (HEEHRA) is another provision of the Inflation Reduction Act that can be applied to a heat pump installation and other HVAC upgrades. HEEHRA offers as much as $14,000 per year in discounts (NOTE: not tax deductions) for electrical projects. These are discounts when the purchase is made.

HEEHRA discounts are capped at 50% of qualifying costs for Phoenix households making between 80% and 150% of area median income. For households below that income threshold, HEEHRA covers 100% of qualifying costs up to $14,000.

Inflation Reduction Act HEEHRA rebate table

While the HOMES Rebate and the HEEHRA rebate cannot be combined, you are allowed to claim HEEHRA rebates and tax credits.

Like the HOMES Rebate program, funds for the HEEHRA will become available later in 2023—the exact timeline depends on Department of Energy guidelines and state implementation. It is up to individual states to determine if HEEHRA rebates will be retroactive. Low-income households will receive higher up-front discounts from HEEHRA than the HOMES rebate.

Contact ACE Home Services at 602-517-0183 and schedule an appointment to see how you can upgrade your house and save with the HEEHRA or HOMES rebates.

Get answers to all your heat pump, HVAC, and Inflation Reduction Act (IRA) questions at ACE Home Services

The trusted HVAC experts at ACE Home Services know the ins and out of the IRA rebates and tax incentives that will apply to heat pumps to heat and cool your house, HVAC upgrades, and many other energy efficient home upgrades. Let us help you choose the right system for your home and work with you on what IRA tax rebates apply. Contact us at 602-517-0183 today to make an appointment or ask us questions you may have about how you can take advantage of the Inflation Reduction Act.

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