Get Smart About the ITC
Recent changes to the ITC will greatly affect the HVAC industry to come! Are you aware of these changes? Here’s what you need to know!
The Rising Cost of Energy
The cost of energy has been steadily on the rise. While we have seen a slight decrease in this recently, the cost is projected to go up again within the next year. That being said, many contractors are looking for cost effective solutions that continue to meet code requirements for energy efficiency.
What is the ITC?
The Inflation Reduction Act (IRA-2022) is incentivizing new HVAC products with the Federal Investment Tax Credit (ITC). It was passed into law to advance clean energy and reduce greenhouse gas emissions by investing in domestic energy production. The ITC will encourage improvements in energy efficiency, lower the nation’s carbon footprint, and reduce costs in healthcare, education, hospitality, and manufacturing.
The initial 10% tax credit has been expanded up to 50%! The legislation provides over $10 billion in rebates and tax credits to help install important upgrades, increase energy efficiency, and use renewable energy. In addition to tax credits, that taxpayers can claim directly, the act includes federal grants to state energy offices so they can develop incentive programs.
How Do I Know if I Qualify?
Projects must begin by the end of 2024 and meet the following criteria:
- The maximum net output is 1MW
- Project less than 1MW that use steel manufactured in the US or meet labor requirements qualify for 40%
- Applications over 1MW must meet labor requirements
- Projects in “energy community” with aforementioned requirements qualify for 50%
- Non-Profits and Non-Taxable entities can receive direct rebates
Additional benefits are available for those who qualify. 5-year depreciation benefits are available when less than 50% of tax credit is received.
Looking for more information? Have any Questions?
Contact Us for more information about the ITC or to see if your latest project will qualify!