Furnaces, Air Conditioners, and Electric and Gas Water Heaters

Natural gas, propane and oil furnaces; central air conditioners; hot water boilers; and natural gas, propane, and oil water heaters must meet the Consortium for Energy Efficiency’s (CEE) highest efficiency tier of requirements (excluding advanced tiers). Requirements vary according to the climate regions specified by the Department of Energy (DOE). The CEE specifies Seasonal Energy Efficiency Rating 2 (SEER2), Energy Efficiency Rating 2 (EER2), criteria for each qualifying furnace, air conditioner, and Uniform Energy Factor (UEF) water heater.

Heat Pumps and Heat Pump Water Heaters

Electric or natural gas heat pumps and electric or natural gas heat pump water heaters must also meet the CEE’s highest efficiency tier of requirements (excluding advanced tiers) for SEER2, EER2, and HSPF2, which differ by the climate regions defined by the DOE.

Heat pumps earn the special distinction of receiving an increased tax credit of $2,000, which can be combined with the $1,200 allotted for the other assets on this list. Also of note, the CEE calls for adequate capacity of air source heat pumps in low ambient temperatures.

Insulation and Air Sealing

To be eligible for the tax credit, insulation and air sealing materials or systems must meet the criteria established by the International Energy Conservation Code (IECC) standard in effect at the start of the year two years prior to the installation. In other words, insulation or air sealing materials installed in 2023 must meet the criteria established by the IECC in effect on January 1, 2021.

IECC requirements vary by the DOE’s eight climate zones, R-value (how well the insulation prevents the flow of heat into and out of the home), whether an attic space exists or not, and whether a basement or crawl space exists.

Panelboards

Qualifying panelboards, sub-panelboards, branch circuits, and feeders must be installed according to the National Electric Code and have a load capacity of 200 amps or more to earn the $1,200 tax credit. 

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Biomass Stoves and Boilers

To qualify for the Energy Efficient Home Improvement Credit, biomass stoves and biomass boilers must have a thermal efficiency rating of at least 75%.

Exterior Doors

Exterior Doors that meet ENERGY STAR requirements, qualify for a tax credit of up to 30% of the cost or a maximum of $250 per door with a maximum of two exterior doors. Compared to other doors, ENERGY STAR exterior doors leak less and admit less heat into the home.

Windows and Skylights

To qualify for the Energy Efficient Home Improvement Credit, windows and skylights must meet the most efficient ENERGY STAR certification requirements. The tax credit covers 30% of the total cost, up to a maximum of $600. Energy-efficient windows insulate the home better, permit less solar heat into the home, and leak less.

IRA Resource Center

This article covers just one tax credit included in the IRA; the IRA establishes additional tax credits, as well as rebates that remain to be implemented by state energy offices. Thankfully, you don’t have to navigate these complexities alone. One

advantage of membership in the Pearl Network is that Pearl Certification is constantly monitoring IRA developments as they become available and communicates these updates to Pearl Network Contractors.

Pearl’s online Inflation Reduction Act Resource Center provides a convenient central location of key IRA information, including industry-specific tax credit reference sheets, webinar recordings, sample IRA text for business websites, FAQs, and more.