Consumer Reports analyzes the Inflation Reduction Act's heat pump provision
As an ardent fan of Consumer Reports, I'm letting them do my homework on analyzing the IRA (Inflation Reduction Act). Here's the link...
A couple of things stood out.
1. Lots of people who buy one won't qualify for any IRS tax savings for one of two reasons: they don't make enough or they make too much.
- If your household income is less than 80 percent of your state’s median household income, you are eligible for 100 percent of the rebates available. So if you spend $10,000 on a heat pump and a heat pump water heater, you could get $9,750 back, depending on the specifics of your state’s rebate program.
- If your household income is 80 percent to 150 percent of your state’s median income, you are eligible for 50 percent of the rebates available. So for a $10,000 heat pump and heat pump water heater, you could get $4,875 back, depending on specifics.
- If your household income is more than 150 percent of your state’s median income, you are not eligible for these rebates.
I imagine that many people (most) who read consumer reports, for instance, earn more than 150% of their state's median income. No dice for them to save on their taxes if they get one. And, I intuit that the folks making less than 80% of their state's median income probably aren't paying a lot of taxes, so they probably won't get much back from this tax credit, either, unless they ('they' being the IRS) make it a refundable credit. In the past, similar rebates on Form 5695 were not refundable. So, you'd really need to thread the needle to get much cheese back from fiddling with this rebate. If it's refundable, that's another matter. (Anyone know for sure? If so, post in the comments section. I can't find anything on this.)
2. And, from their download referenced in the link above, 75% stated that they'd buy a heat pump next time around when posed the question 'If you were to do it over again, would you choose to have a heat pump for the heating in your home?' Of the other 25%, only 13% thought that a heat pump would cost them more money for their utility bill. And, true, for many with heavy cooling needs but low heating needs (e.g., S. Texas, Florida), a heat pump is a no-brainer that will save them money for both heating and cooling. But in much of the country, running a heat pump for heating is considerably more expensive than using a traditional natural gas heater, assuming that a heat pump, or series of them, could reach the heating setpoint in these regions. So, it could be scary for lots of folks in, say, Michigan, who dump their natural gas heating to opt for this tax credit only to find out that their heating bills in the winter shooting through the roof (for those that don't have good insulation, literally). There's a potential way to run these units partially off of solar for heating in the northern territories, but do your due diligence to become knowledgeable on if you're going to save money heating with a heat pump in these locales. Gas prices are way up, so that'll help it work for some, but gas is still very very cheap compared to electricity in much of the country.