How the Inflation Reduction Act Will Lower the Cost of a Hybrid Water Heater

New federal law provides rebates and tax incentives for energy-efficient heat pump water heaters.

No matter what’s happening around me lately, my mind keeps coming back to how I can spend less money, save more money, or continue running my household and business on the same amount. Everyone I talk with is a little more financially aware lately.

And since typical household operating costs are stretched, can we even consider home improvements? Or, God forbid, an emergency?

Only four in 10 Americans have enough in savings to cover a $1,000 emergency expense, according to a Bankrate survey. And inflation continues to increase our costs while our incomes remain the same.

Inflation Reduction Act

You’re probably asking, “Is there any good news, Phil? Any relief?” Yes. There is good news on the home improvement/household emergency front. The Inflation Reduction Act Congress recently passed provides rebates, tax credits, and incentives to encourage homeowners to switch to energy-efficient appliances and home systems.

There are two main ways the Inflation Reduction Act can decrease the cost of energy-efficient appliances, like high-efficiency hybrid water heaters (aka “heat pump water heaters”).

High-Efficiency Electric Home Rebate (HEEHRA)

• What: An upfront rebate/discount at the time of purchase
• How much: Maximum rebate is $1,750, specifically for heat pump water heaters
• When: Starts January 1, 2023. The program expires after 10 years.
• Who: Homeowners with low-to-moderate household incomes.

Qualifying households are defined in the law as “individuals or families whose annual incomes are less than 80 % of the area median or not greater than 150 % of the median.”

If you have no idea how to determine if you qualify as a low-to-moderate income household, use this benefits calculator from Rewiring America.

Energy Efficient Home Improvement Credit

• What: Tax credit, which allows you to deduct the credit from the amount of taxes owed
• How much: 30 % of the total project cost (including appliance cost, labor, and parts). The maximum credit is $2,000 for electric heat pump water heaters.
• When: Starts January 1, 2023. The program expires after 10 years.
• Who: All homeowners

According to Rewiring America’s benefits calculator, low-to-moderate-income households can combine the rebate and tax credit. Check with an accountant to be certain.

Even more savings

In addition to these new programs the Inflation Reduction Act will introduce in 2023, additional rebates are available now through local and state government programs. And as is the nature of rebate programs, they are temporary. If you aren’t ready to make the switch, we can add you to our Rebate Waiting List when you call us at (925) 438-6326.

Not only will you receive quality workmanship from our trained technicians, but we will also complete all of the necessary rebate paperwork for you. You do not have to wait for a check in the mail since the rebate is instantly deducted from your Barnett invoice. It’s a win-win situation!

After you switch to a high-efficiency hybrid water heater, you can expect to save at least $200 a year (for a family of four) in utility costs. Switching to a hybrid from an electric water heater will save you even more on your utility bill! And combining your hybrid water heater with your solar system will save you the most monthly money.

What questions do you have about your water heater — hybrid or conventional? We’ll happily answer them and ensure you have the right system for you and your family. Give us a call at (925) 438-6326.