Please note that information is still forthcoming and evolving. There are several unknowns at the state level, and changes are inevitable.

What is the Inflation Reduction Act (IRA)?

To help reduce inflation, decrease carbon emissions, and more, the U.S. Government has passed the Inflation Reduction Act (IRA), which includes several tax credits for installing ENERGY STAR® certified home heating and cooling products. The IRA consists of rebates and tax credits for HVAC.

What is the difference between IRA rebates and tax credit offerings?

There are two rebate programs available. Rebates are administered at the state level and favor lower-income households. Federally funded rebates cannot be combined and are intended for immediate, point-of-sale benefit.

There are four tax credits available. Tax credits are federal income tax credits available to anyone with taxable income. Tax credits can be combined, and rebates can be filed for
the following calendar/tax year.

What are the tax credits included in the Inflation Reduction Act?

Tax Section 25C: Nonbusiness Energy Property Credit
- Provides a tax credit to homeowners equal to 30% of installation costs for the highest efficiency tier products, up to a maximum of $600 for qualified air conditioners and furnaces and a maximum of $2,000 for qualified heat pumps.
Tax section 25D: Residential Energy Efficient Property
- Provides a tax credit to homeowners equal to 30% of installation costs for ENERGY STAR® geothermal heat pumps until 2032. That percentage drops to 26% in 2033 and 22% in 2034.
Tax Section 45L: New Energy Efficient Home Credit
- Provides tax credits to builders for meeting specific energy-saving criteria. The tax credits for ENERGY STAR 3.1 certified housing are $2,500 for single-family homes and $500 for multi-family units. To meet the Department of Energy’s Zero Energy Ready requirements, the tax credit increases to $5,000 for single-family and $1,000 for multi-family residences. If prevailing wage requirements are met on multi-family construction, those credits increase to $2,500 and $5,000
Tax Section 179D: Commercial Buildings Energy-Efficiency Tax Deduction
- Provides a tax deduction for building owners to claim for installing qualifying systems in buildings.
- Up to $14,000 maximum for all.

What are the rebates included in the IRA?

High-Efficiency Electric Home Rebate Program
- Provides income-depending rebates to low to moderate-income (LMI) homeowners, including:
  - Up to $8,000 for all-electric heat pumps
  - Up to $4,000 for electrical load service center
  - Up to $2,500 for electric wiring
HOMES Rebate
- Provides rebates for energy efficiency upgrades that improve a single-family homes or multi-family building’s overall energy performance.

How should dealers leverage this opportunity?

Research the potential tax credits available, the efficiency requirements to earn the credit and the products that meet those criteria. Then, communicate those potential incentives in every sales presentation.

Do the IRA savings apply to installations done in 2020 and 2021?

No.

CEE

What is CEE?

The Consortium for Energy Efficiency (CEE) is an award-winning non-profit comprised of U.S. and Canadian energy efficiency administrators working together to accelerate the development and availability of energy-efficient products and services. CEE harmonizes program approaches in North America by supporting the production and market adoption of energy-efficient and connected equipment, installation and maintenance guidance, and facilitating program opportunities for each unique customer.

What are the CEE specifications and tiers?

The CEE equipment specifications for air conditioners, heat pumps and furnaces can be found at the following links. Currently, the direction is that the IRS will require eligibility for 25C to adhere to the highest tier below the Advanced tier for each product. It is still unclear whether the IRS will include regional distinctions, North versus South.

The highest tier refers to the tier below the “Advanced Tier” with “Tier 1” being the lowest tier if there are multiple tiers listed.

Is CEE the same as NEEP?

No.

In regard to CEE, what about the equipment?

Only M1-rated equipment is applicable.

LMI

What is LMI?

Low-to-Moderate Income (LMI) based on the area median income (AMI).

How is LMI determined and who makes that determination?

LMI is determined at the various levels (state, city, county level). Please refer to your local municipal office for information about your area.

Does a list of LMI by state exist?

LMI is determined at various levels (state, city, county level). Please refer to your local municipal office for information about your area.

Do you have a breakdown on what tax credit the homeowner will receive based on income?

Please refer to the TM Webinar Deck for a breakdown of the income levels required for rebate qualification.

What constitutes a cold climate heat pump?

The performance requirements for Energy Star and cold climate heat pumps can be found here.

25C

Do the heat pump and furnace count for 25C – $2,600 credit, or is it capped at $2,000?

Our understanding is that if both units meet the criteria, both items can be claimed. Please consult with your tax professional for more information

Is there a lifetime cap for a homeowner on this funding?

25C does not have a lifetime cap, but the program expires in 2032.

Do dealers need to provide a complete job breakdown for equipment, material, labor/install?

We are not aware of the documentation that will be required for filing. Please consult your tax professional for more information.

Where does the money for 25C come from?

25C is a federal tax credit. The rebate programs, though funded at the Federal level, are administered at the state level, and are funded separately from the IRA in the amount of $4.3 billion for both rebates.

Is the 25C a $3,200, one-time cap, or is it a yearly cap?

There is no lifetime cap, but there is an annual cap of $1,200 for qualifying products and a separate annual cap of $2,000 for heat pumps. If combining a heat pump with other qualifying products, a homeowner could receive up to $3,200. Please consult your tax professional for more information.

QUALIFICATIONS

Is the tax credit based on a system combo installation? Can you qualify with just a heat pump only installation?

The IRS intends for a qualifying system. If the IRS requires an AHRI certification number, then a heat pump installed would have to be installed on a system combination that meets the requirements. However, we do not know what the IRS will require upon filing.

Does AHRI state if a match-up is eligible for tax credit?

AHRI has not updated their site to match the 2023 tax requirements or the Energy Star 6.1 requirements.

What rating do we use if there is mixed equipment? For example, 2022 indoor unites with new 2023 heat pumps?

All of the requirements for 2023 installations reference M1 ratings. There currently isn’t any direction regarding M-rated equipment.

How does the new IRA tax credit work in homes with multiple systems?

Regardless of the number of systems, the taxpayer is limited by the annual limit. Replacement of one system would likely meet the annual limit so to maximize the tax benefit, they should subsequent systems in later years.

STATE REBATES / Point of Sale

Can Federal rebates be combined with state rebates like NYS clean heat?

Federal rebates cannot be combined with any other federally funded rebate program included in the IRA. We are unaware of any restrictions for other non-IRA programs.

Will dealers have to require financial records at point-of-sale?

We do not know this information at this time.

How are our dealers supposed to administer a POS rebate without verifying household income?

We do not know this information at this time; each state will determine this process.

Are contractors expected to float thousands of dollars on the sales until funded by the state government?

We do not know this information at this time; each state will determine this process.

TIMING

Will customers seeking to take advantage of the rebate programs for 2023 installations be able to retroactively apply for the rebate once their state establishes the program, even in 2024?

No information on this is available at this time. This will be decided at state level.

Are tax credits retroactive to 2022? Would 2022 installations apply similarly on an existing program?

2022 installations that qualified based on the 2022 criteria can be filed for tax credit in the 2023 tax year. Qualified installations occurring in 2023 need to meet the 2023 criteria and would be included in the household’s 2024 tax filings. Please consult your tax professional for more information.

Is there any indication from the IRS that there will be a lifetime limit on payouts under the Inflation Reduction Act, and can a consumer file separate claims for multiple systems?

Please consult your tax professional for more information regarding filing separate claims on multiple systems/homes owned by the consumer.

Talking Points

Dealers should renew efforts in selling higher-efficiency systems by researching the potential tax credits available and the products that meet the efficiency requirements to earn the credit.
Dealers should then communicate potential incentives in every sales presentation and, at the same time, consider reaching out to customers who installed qualifying systems between January 1, 2022, and December 31, 2022, and let them know they may qualify for the credit as well.

Customer Reviews

Shondra J ones

They were lifesavers!!! My furnace went out and after three days of dealing with the home warranty company and the unscrupulous vendor they sent to my home, I called Mannix. The service technician was friendly, efficient but most of all honest. He found the problem after twenty minutes, saving me thousands in unnecessary replacement costs. It is refreshing to know that honest people still exist.

Lynne Wilson

I contacted Mannix from a referral of a friend who has benefitted from the excellent service this company provides. I found out a couple I know in Vienna had their heat pump stop working a few months ago and needed to be replaced. I called up the Mannix office later in the day on Monday 11/30/20 and provided information needed. I had a proposal in my email the next morning 12-01-20. This will enable me to discuss with my friends how they wish to proceed with fair financing options available too. This is EXCELLENT customer service and I would like Mr. Mannix to know that Sarah is an amazing professional face for his company. I plan to become a customer of theirs by signing up for the annual maintenance plan which is very reasonable priced. Sincerely, Lynne Wilson

Philip Slingerland

Been a happy Mannix customer for a few years now, but recently had them replace our aging HVAC system. The whole process was very painless, from Eric helping us decide which system was right for our home, to the efficient and professional installation by Billy and Matt. I am very pleased with the new system and very impressed with the level of service, communication, and detailed information I received from everyone involved. Highly recommend!

K.E.

Before dealing with Mannix I used two very well-known and “reputable” HVAC companies who did nothing but rip us off over the years. I was frustrated and found Mannix Heating & Cooling about 10 years ago. They installed a new HVAC system in my old home, and installed a water heater and various other items in my new home. They also have been doing yearly maintenance for years. Their employees are the most honest, reliable, and knowledgeable individuals in this industry. We recently had an issue with our HVAC system and they came out within a few hours on an emergency call. The technician was prompt, kind, professional, and very fair. He figured out what was wrong with our system quickly and remedied it immediately. Do not hesitate to call them if you need anything–you won’t regret it!

Wendy Collins

Mannix has always been professional from service calls to repairs and replacements. The technicians are always polite and knowledgeable. They consistently exceed our expectations.

Gary Hendricks

Mannix proved very responsive in fixing my A/C system. The tech, Erick, was very professional by taking the time showing and explaining to me the system problem prior to taking action replacing the coil. Ashleigh, customer service, was excellent in addressing and following through on concerns in order to achieve total customer satisfaction.

M. Reyzer

My 24-year-old heat pump finally decided to stop working. I sent a request for a replacement estimate late one night through the Mannix website and received a phone call early the very next morning to set up an appointment. Eric Holzworth stopped by my house the next day to go over my options. He was wonderful and so easy to work with and answered every question I had. He definitely listened to me and my concerns did not push me into purchasing a high-end system which I didn’t need. The technicians arrived at 8am and were finished with the entire installation by 1pm. They were very courteous and left my house in pristine condition. I HIGHLY recommend Mannix! They always returned my calls and emails right away, and Eric made sure I received all of my equipment on time–even with Carrier factory delays/limited supplies due to COVID. So glad I chose Mannix. I love my brand new Carrier system and my cold house during these hot and humid days.

M.B.

We were in desperate need of a fix on our AC system during the July heatwave. The issue arose on a Saturday. Mannix came to the rescue in short order, fixed it, and at a reasonable price.

Silvio G was the technician, and he was GREAT.

We would definitely use Mannix again!

Patricia Ryan

I have been using Mannix for years. They have replaced my HVAC system and I have them do maintenance twice a year. The past couple of visits have been done by Ramiro. He is professional, polite, knowledgeable, and very helpful in assisting me with tips on the best ways to operate my system. Today, he installed a water safety device and taught me exactly how it works and how to reset it. I’m so impressed with him! I will continue with Mannix for years to come as I find them to be very reputable and reliable. Thank you!

Rachel Craft

I’ve been using Mannix for years and have never been disappointed. They’ve replaced my HVAC, hot water heater and installed a humidifier on my furnace. Whenever I need them, they can get me on the schedule in a timely manner. All the personnel are great and I trust Jerry and his team with their recommendations and the work they do. Would highly recommend.

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