Can You Save Money With the Inflation Reduction Act in Michigan?

The Inflation Reduction Act (IRA) will help Michigan homeowners to invest in home improvement projects while saving money. It includes two major rebate programs and a federal tax credit to cut the costs of high-efficiency electric system installations and weatherization upgrades.

IRA is a historic piece of legislation, as it will help the United States decrease greenhouse gas emissions by about 40% to get to below 2005 levels by 2030. In the process, homeowners nationwide will save significantly on energy-efficient home upgrades.

In this article, we’ll look at the ways you can save money with the IRA in Michigan, including:

  • High-efficiency electric HVAC system rebates
  • High-efficiency electric HVAC system and weatherization tax credits

Install an Energy-Efficient Heat Pump in Michigan with Thornton & Grooms!

Contact Thornton & Grooms at (248) 644-7810 today to receive information about how the Inflation Reduction Act’s rebates and tax credits apply to heat pump installations. For over 85 years, we’ve installed HVAC systems in the Detroit Metro area and received over eight thousand glowing 5-star reviews.

When you install an installation estimate with us, you know we’ll assist you with filing system rebate paperwork, provide you with a “We Care” guarantee, and further reduce costs with our financing options.

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High-Efficiency Electric HVAC System Rebates

Under the IRA, Michigan homeowners will have access to multiple rebate programs that help low and moderate-income households make energy-efficient HVAC systems and weatherization upgrades to save money in the long term. These programs reduce upfront labor and equipment costs.

An example is how homeowners who install electric heat pump systems, which are 30-60% more efficient and better at humidity control than traditional HVAC systems, will have lower utility bills.

The primary rebate program for the IRA is the High-Efficiency Electric Home Rebate Act (HEEHRA). Regardless of income, HEEHRA caps any heat pump installation project at $8,000 and any home improvement project at $14,000. Depending on your household income …

  • It covers 100% of the heat pump installation cost for eligible households that make less than 80% of their area’s median income.
  • It covers half the installation cost for households with 80-150% of the median income.

Another rebate program under the IRA is the Homeowner Managing Energy Savings (HOMES). If a contractor can prove that a heat pump installation can achieve a minimum of 20% in energy savings, a household can receive rebates of up to $8,000. Michigan homeowners can also receive larger rebates for home improvement projects that cut their energy consumption by 35% or more.

The HOMES rebate program is live as of January 2023; HEEHRA will start in late 2023. You can stack the two rebates, but not for the same project. So, for example, you could use HEEHRA to upgrade your home’s electrical panel and then HOMES for a heat pump installation.

High-Efficiency Electric HVAC System & Weatherization Tax Credits

Another program under the IRA is the 25C Non-Business Energy Property Tax Credit, which rolled out in January 2023. This tax credit allows Michigan homeowners to deduct up to 30% of the costs for any qualifying energy-efficiency project from their taxes. The maximum limit for heat pump installation deductions is $2,000 per year. Other house upgrades have a $1,200 per year cap.

Beyond high-efficiency HVAC system installations, the 25C Tax Credit provides cost-saving ways for low and moderate-income families to save money on weatherization upgrades, which will help them save money and cut energy consumption. Proper weatherization can save Michigan homeowners 20-25% on their yearly heating costs.

You can start your better weatherization journey with a home energy audit, which many utility companies provide. The 25C Tax Credit covers this home energy audit. Based on the audit results, you may receive recommendations for improving the following:

  • Insulation: Optimizing your home’s insulation can give you a great Return on Investment as it means you won’t have to pay for more heating and cooling than you actually need to. Insulation can include anything from weather stripping to house wrapping, but all products and services must come with a Manufacturer's Certification Statement.
  • Windows and doors: Windows and doors that hold temperature well are critical to having an energy-efficient home. The 25C Tax Credit covers up to $1,200 of the cost of swapping out exterior windows for ones that hold temperature better.
  • Programmable and smart thermostats: Installing a programmable or smart thermostat can further reduce your home’s energy usage. While the 25C Tax Credit doesn’t specifically cover thermostat installation, many local utility companies in Michigan will offer incentives for this. Read our blog, Ultimate Guide to HVAC Rebates, Tax Credits, and Incentives in Michigan to learn more.

You also aren’t restricted to the 25C Tax Credit for weatherization. Michigan’s Weatherization Assistance Program provides wall insulation, attic insulation and ventilation, foundation insulation, air leakage reduction, and dryer venting services to low-income homeowners.

Learn How You Can Benefit From the Inflation Reduction Act in Michigan With Thornton & Grooms

Contact Thornton & Grooms at (248) 644-7810 or the button below for more information on HEEHRA, HOMES, and the 25C Tax Credit. We’ll help you file system rebates on your behalf and answer any questions you may have about how to benefit from the Inflation Reduction Act in Michigan.

Detroit Metro homeowners trust us to provide them with high-quality HVAC system installations for an affordable price, from our high-efficiency electric heat pump systems to flexible financing options to our unique “We Care” Guarantee. For over 85 years, we’ve built a 5-star reputation for our expertise and customer service. We’ll help you find the right rebate or tax credit for your electrification and weatherization goals, home, and budget.

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