The US government passed the Inflation Reduction Act of 2022, a piece of legislation covering a broad spectrum of initiatives including several incentives for the installation of high efficiency home heating & cooling equipment. The 25C tax credits have been expanded & extended as part of this initiative and $4.3 billion has been allocated and will be distributed to individual states for administering rebates on ENERGY STAR certified equipment sometime later this year.
As for now, the expansion & extension of the 25C federal tax credits are as follows:
The lifetime limit of $500 per household for the 25C tax credits has been eliminated. Homeowners can now qualify for a credit of 30% of the cost to install qualifying equipment up to $2600 annually through 2032. Other home improvements include installing energy saving doors, windows & insulation in addition to installing qualifying HVAC equipment.
Another part of the IRA that is still to come is the High Efficiency Electric Home Rebate Program (HEEHRP) which will have household income limitations. Funds for the HEEHRP will be allocated to state energy offices with a fair amount of discretion on how they will be used. Funding allocations will vary from state-to-state and depending on the state, rebate programs may take some time to get implemented.
NOTE: SEER2 / EER2 / HSPF2 is the new rating system for air conditioners & heat pumps. Those units rated under the old SEER / EER / HSPF system may not qualify.
NOTE2: Heat pumps have five parameters of which it must meet to qualify for the tax credit. In addition to the SEER2, EER2 & HSPF2 ratings, heat pumps must reach necessary numbers for COP & capacity ratio.
NOTE3: The High-Efficiency Electric Home Rebate program does require the applicant to replace non-electric equipment, meaning one must replace a fossil fuel-fired furnace with a heat pump and air handler to qualify for the rebate. The 25C tax credit appears to include qualifying hybrid systems.