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Take Advantage of Tax Credits and Rebates from the Inflation Reduction Act

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At the beginning of 2023 the new Inflation Reduction Act (IRA) was signed. The goal of this new legislation is to help lower US carbon emissions amidst the current climate crisis. The US government has allocated significant funds for this effort, and Phoenix-area homeowners can save big with tax incentives, reimbursements, and decreased energy bills when make home upgrades to be more energy-efficient under the Inflation Reduction Act.

How much can you save?

Homeowners in the Phoenix-metro area who invest in energy efficient HVAC upgrades have the opportunity to save a whopping $17,000 in tax credits and rebates through the IRA. To get an estimate on just how much you can save on your utility bills, use this handy calculator on the Rewiring America website. Then give us a call at ACE Home Services to talk to a pro about the various home improvement options available.

Save on your 2023 taxes with IRA credits

We all like finding ways to save money, especially when it comes to taxes. Phoenix-area homeowners who purchase and install energy-efficient upgrades, such as efficient doors and windows, air conditioners, furnaces, heat pumps, etc., can take advantage of tax credits included in the Inflation Reduction Act.

Up to $3,200 per year

The Inflation Reduction Act’s Energy Efficient Home Improvement Tax Credit is an extension of the 25C tax credit and offers homeowners a 30% tax credit on certain energy-efficient home upgrades, with a maximum benefit of $3,200 per year. Check out the list below to see what appliances and upgrades are eligible for this tax credit. The professionals at ACE Home Services are here to help when you decide to invest in energy-efficient home upgrades or replacements.

It’s important to remember that these savings are not immediately provided, but instead added to your tax credit amount at the time of filing. ACE Home Services can provide assistance when you are looking for upgrades that qualify for the tax credit. Give us a call at 602-517-0122 for more information.

NOTE: ACE Home Services can provide information on qualifying appliances, but we cannot provide any tax or other financial advice. Please contact your tax professional if you need help filing when the time comes.

Here’s a good view of how much you could save on your utility bills each year:

Inflation Reduction Act 25C tax rebate table

You can see full overview of the Energy Efficient Home Improvement Tax Credit and qualifying appliances here.

Who is eligible for the IRA tax credits?

All Phoenix-area homeowners who make home improvements after January 1, 2023 are eligible to benefit from the Energy Efficient Home Improvement Tax Credit. A household can receive up to $1200 each year, or up to $2000 for a heat pumps. The annual maximum is $3200 per household per year for the tax credit. This is an ideal time to get started on making improvements your home and benefit from these tax incentives! Call ACE Home Services for advice on products or installation

ACE Home Services can provide you with the necessary paperwork to apply the tax credits after installation. Use this handy IRA savings estimation calculator to find out how much you can save by taking advantage of these credits.

Rebates included in the Inflation Reduction Act

Homeowners of the Phoenix, AZ metro area can also take advantage of the HEEHRA and HOMES rebates included in the Inflation Reduction Act. These will become available later on this year.

HEEHRA rebates

The High Efficiency Electric Home Rebate Act (HEEHRA) provides households with low to moderate income with the opportunity to upgrade to energy-efficient electric appliances with rebates of up to $14,000 per year. Eligible households must make an income below the 150% area median income. To get all the information about this rebate program, check the chart below.

Inflation Reduction Act HEEHRA rebate table

If you have questions about what rebates are available, give ACE Home Services a call at 602-517-0141. Keep in mind that rebates may not be available yet in the Phoenix metro area, but they will be coming soon in 2023.

HOMES rebates

The Homeownership for Energy Saving Rebate Program (HOMES) encourages homeowners to save energy through rebates for whole-house energy upgrades. This include installations such as heat pumps and electrical improvements that lower your home’s energy use. Making these type of upgrade can qualify the household for $2000 to $8000 in rebates when you reduce your home’s energy use between 20-35%. This reward is doubled or low- or moderate-income households. Not only that, but the HOMES program will also cover up to 80% of the project cost.

You can expect to see the rebates provided under the Inflation Reduction Act come into effect by the end of 2023. To check if the rebates are available when you are ready to make a purchase, please contact ACE Home Services at 602-517-0141. However, please note that the rebates may depend on Arizona’s state guidelines and the Department of Energy regulations.

Save energy and save money this year with the Inflation Reduction Act!

When you make the switch to energy efficient solutions in 2023, you can lower your energy bill, save on your taxes, and even see some significant financial returns. It can seem overwhelming at first, but ACE Home Services is here to answer any questions you have about improving your home and taking advantage of the Inflation Reduction Act’s included tax credits and rebates. Give us a call at 602-517-0122 and our knowledgeable staff can help you understand all the benefits the Act has to offer.

NOTE: We are not tax professionals and can’t offer financial advice. Please contact your tax preparation professional or the IRS website for help in filing your taxes and claiming any credits.

Frequently Asked Questions

What are the differences between tax credits and rebates under the Inflation Reduction Act?

If you upgrade your home, you can claim the tax credits included in your IRA on your tax return, which reduces your tax liability. With the 25C tax credit, customers can receive an annual tax incentive of up to $3200 with the IRA. The tax credit can be claimed for both this year and next year if you install a heat pump air conditioning system or a heat pump water heater in your home.

A rebate is a type of upfront savings that is applied at the point of sale. The service provider is responsible for handling the paperwork and processing the rebate.

Can rebates be applied retroactively?

Rebates will be retroactive at the discretion of each state, according to state energy offices.

Is it possible to combine rebates and tax credits?

HOMES and HEERHA rebates cannot be used for the same upgrade, but they can be combined for separate upgrades, such as upgrading your water heater with HEERHA and upgrading your heat pump with HOMES.

Inflation Reduction Act tax credits can still be claimed while getting HEEHRA and HOMES rebates.

What should I do first?

Whether you need heat pumps, electrical upgrades, energy efficient plumbing, or any other type of inflation reduction act incentive, ACE Home Services’ trusted experts in Phoenix, AZ know all the ins and outs of the Inflation Reduction Act incentives and can provide you with all the information you need to apply for the tax credits or rebates you qualify for. Call us today at 602-517-0141 to schedule an appointment or ask any questions.

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