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The Inflation Reduction Act (IRA), signed in 2022 under President Biden, significantly expanded federal credits for the HVAC industry, particularly in these ways.
Section 25C (Energy Efficient Home Improvement Credit): Offers homeowners up to $1,200 annually for qualifying HVAC equipment (e.g., high-efficiency air conditioners, furnaces) and up to $2,000 for heat pumps, covering 30% of costs including installation. This applies to ENERGY STAR-certified systems meeting specific efficiency standards (e.g., SEER2, HSPF2 ratings).
Section 45L (New Energy Efficient Home Credit): Provides builders up to $2,500 or $5,000 per unit for energy-efficient homes, often tied to HVAC system efficiency.
Home Energy Rebates: Allocates $8.8 billion for state-administered rebates, including up to $8,000 for heat pump installations for low- and moderate-income households under the High-Efficiency Electric Home Rebate Act (HEEHRA).
These credits have been a boon for the HVAC industry, driving demand for energy-efficient systems and supporting contractors, manufacturers, and homeowners.
As of March 6, 2025, President Trump’s administration has taken steps that directly influence these HVAC-related federal credits. Here a list of a few of those steps
Signed on his first day, this order pauses disbursement of funds appropriated through the IRA, including the $8.8 billion for Home Energy Rebates. This doesn’t immediately affect tax credits like 25C or 45L, which are part of the tax code, but it halts new rebate funding for HVAC upgrades in states that haven’t yet launched programs.
Impact on HVAC: Contractors in the 11 states (plus D.C.) with active rebate programs (e.g., New York, California) can likely continue offering these to customers, as funds were obligated before the freeze. However, in states still awaiting approval (e.g., Arizona, per X posts), businesses like Flagstaff’s CozyHome report losses—up to $8,000 on a single job—due to canceled upgrades, as customers lose access to anticipated rebates.
Titled “Regulatory Freeze Pending Review,” this halted all pending Department of Energy (DOE) rules, including a January 6, 2025, final rule on HVAC test procedures for central air conditioners and heat pumps. While this doesn’t alter existing efficiency standards (e.g., those set in 2023), it delays stricter future standards that could have expanded credit eligibility.
Impact on HVAC: Contractors benefit short-term by continuing to sell a wider range of equipment at lower price points, avoiding immediate cost increases from new standards. However, it slows the push for more efficient systems that qualify for higher credits.
Trump aims to extend the 2017 Tax Cuts and Jobs Act (TCJA), expiring end-2025, which could require offsetting revenue. The IRA’s clean energy credits, including 25C, are prime targets for cuts, as they’re unpopular with many Republicans who see them as “green handouts.” No legislation has passed yet, but the Department of Government Efficiency (DOGE), led by Elon Musk, is tasked with slashing $2.5 trillion in spending, potentially eyeing these credits.
Impact on HVAC: If 25C is reduced (e.g., back to a $600 lifetime cap) or eliminated, demand for high-efficiency HVAC systems could drop, hitting contractors and manufacturers. Heat pumps, which get a $2,000 credit, are especially vulnerable given Trump’s anti-electrification stance.
Heat Pump Incentives: Trump’s order to “terminate the Green New Deal” and “revoke the electric vehicle mandate” signals hostility to electrification, including heat pumps. The rebate freeze directly threatens HEEHRA’s $8,000 heat pump rebates, though tax credits remain intact for 2025 filings unless Congress acts. Industry experts note that 2023 IRS data showed air conditioners outpacing heat pumps in 25C claims despite the latter’s larger credit, suggesting rebates were a bigger driver—now at risk.
Equipment Costs and Refrigerant Shift: The EPA’s 2025 ban on R-410A systems (unrelated to Trump’s actions) already raises HVAC prices by ~30% due to new refrigerants like R-454B. A potential loss of credits or rebates compounds this, making upgrades less affordable and potentially slowing sales.
Contractor Challenges: HVAC businesses face uncertainty. In states with frozen rebates, contractors report customer cancellations, while the tax credit’s future hinges on Congressional action. ACCA and HARDI suggest contractors highlight existing 25C benefits (still claimable for 2025) and diversify offerings (e.g., gas-powered systems) to hedge against policy shifts.
2025 HVAC Industry Credits/Rebates Under New Trump Administration
Extended Service Agreements provide labor coverage for covered repairs
| Credit/Rebate | Current Status (March 6, 2025) | Anticipated Changes Under Trump Administration |
| Section 25C (Energy Efficient Home Improvement Credit) | Up to $1,200/year for HVAC equipment (e.g., ACs, furnaces) and $2,000 for heat pumps; 30% of costs incl. installation; ENERGY STAR-certified systems qualify. | Short-Term: Intact for 2025 tax filings unless Congress acts sooner. Long-Term: Likely reduced (e.g., $600 lifetime cap) or repealed by 2026 to offset TCJA extension or cut "green" spending. Heat pump credit at higher risk due to anti-electrification stance. |
| Section 45L (New Energy Efficient Home Credit) | Builders get $2,500-$5,000 per unit for energy-efficient homes, often tied to HVAC efficiency; applies to homes sold/leased by Dec 31, 2032. | Short-Term: Unaffected yet; no immediate executive impact. Long-Term: Possible reduction or elimination if IRA provisions are repealed, though builder lobbying might preserve it in red states. |
| Home Energy Rebates (HEEHRA) | Up to $8,000 for heat pump installs (low/moderate-income households); $8.8B total via states; 11 states + D.C. active, others pending. | Immediate: Funding paused via Jan 20, 2025, executive order; active states continue with obligated funds, but pending states (e.g., AZ) stalled. Long-Term: Likely terminated if IRA funds are redirected or repealed, per Project 2025 goals. |
| Clean Energy Investment Tax Credit (Section 48) | 30% credit for commercial HVAC systems (e.g., geothermal heat pumps) in clean energy projects; bonus credits up to 50% with prevailing wage/apprenticeship rules. | Short-Term: Intact for projects started pre-2025 per Biden-era rules. Long-Term: Expected rollback or phase-out by 2026, favoring fossil fuel incentives over renewables, pending Congressional approval. |
For contractors that are currently installing HVAC equipment and are looking to add up to 10 years labor coverage, please reach out to us for pricing or details.
If you are a homeowner that would like to have 10 years labor coverage for your new HVAC equipment, ask your contractor to reach out to Trinity Warranty to provide coverage. Feel free to reach out to us if you have any questions.
