HVAC incentives look resilient as Trump, Congress target the IRA

Federal incentives for HVAC upgrades may prove one of the most durable parts of the Inflation Reduction Act (IRA), even as President-elect Donald Trump vows to gut the 2022 law.

The big picture: The IRA directed nearly $400 billion to a range of clean energy initiatives, including two point-of-sale rebate programs for HVAC upgrades and the extension of a $2,000 heat pump tax credit, which now runs until 2032. 

What’s happening: Trump has repeatedly criticized the IRA, which passed without a single Republican vote in August 2022, calling it the “green new scam.”

• Republicans have voted 54 times to strip away parts of the law as of late 2024, according to a Congressional votes tracker.  
• “[I will] rescind all unspent funds under the misnamed Inflation Reduction Act,” Trump said in September. 

Yes, but: The HVAC-specific incentives stand among the most likely parts to survive, according to policy experts. 

Zoom in: The rebate programs, dubbed the “Home Energy Rebates,” represent $8.8 billion — or just two percent of the $400 billion earmarked for clean energy initiatives. 

• States are responsible for applying for their own programs, and once approved, are allocated their share of the $8.8 billion. 
• 22 states, plus Washington D.C., have been approved, and another 22 have submitted applications as of January 7. South Dakota is the only state that declined to participate. Full map of state statuses

“It would be very difficult to claw back funds that have already been awarded,” Sean Robertson, a vice president at ACCA, tells Homepros.

Zoom out: The $2,000 heat pump tax credit, known as Section 25C, faces more risk. 

• Republican lawmakers are considering cutting certain tax incentives to fund the extension of Trump’s 2017 Tax Cuts and Jobs Act, which lowered the corporate income tax rate to 21 percent and largely expires this year. 
• In response, AHRI is urging the HVAC industry to sign a letter petitioning Congress to preserve it. 

State of play: “Comprising less than five percent of the IRA’s total tax cuts, we hope Congress will choose to retain important incentives like the Section 25C [tax credit],” Robertson says. 

What’s next: The new Republican-controlled Congress officially began on January 3, and Trump takes office next week. 

• “It is a lot easier to say you will repeal something on the campaign trail than actually doing it when you get into the White House,” wrote Kyle Gargaro of ACHR News, shortly after the election.