HVAC Tax Incentives Cut In Federal Tax Policy Proposal
The One Big Beautiful Bill would end nearly all incentives for energy efficient equipment
The federal government’s tax changes adopted by the House of Representatives Thursday would end tax credits and incentives for more energy efficient HVAC equipment.
The policy, dubbed the One Big Beautiful Bill, would end the incentives at the end of 2025, about seven years earlier than scheduled.
The tax proposal targets several policies aimed at boosting efficiency and reducing environmental impacts. It passed the House by a narrow margin. It now goes the Senate.
Republicans have signaled an intent to cut tax breaks and other consumer financial incentives linked to the Inflation Reduction Act or 2022 (IRA) to raise money for a multi-trillion-dollar package of their own combination of tax cuts and spending priorities.
The legislation passed under the Biden administration offered tax incentives for consumers who made their homes more energy efficient, including a 30% tax credit applied to the cost of qualifying HVAC systems, up to $1,200. Another credit for qualified heat pumps, water heaters, biomass stoves, or biomass boilers had an annual limit of $2,000.
The program also offered rebates through states aimed at low- and middle-income households. Several utility companies also offer rebates to upgrade equipment.
The tax breaks are credited with boosting the sales of more efficient equipment, when customers were made aware of the incentives.

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