Heat Pump Water Heater Tax Credit

[BillD]

Does anyone know if I qualify for the Energy Star tax rebate for a heat pump water heater if I'm upgrading from a standard NG tank heater? I had a plumber tell me that I would only qualify if I was upgrading from a standard electric tank heater. I couldn't seem to find any evidence of that on the Energy Star website. Am I missing something?

Thanks,
Bill

 

[Twowaxhack]

Consult your accountant.

 

[breplum]

to be congruent with feds IRA of 2022, it is probably income qualified.
google it dude

 

[BlueSkyHigh]

Are heat pump-based water heaters reliable?

 

[Mitchell-DIY-Guy]

https://www.energystar.gov/about/federal_tax_credits/water_heaters_non_solar

 

[Ludington]

There is a

High-Efficiency Electric Home Rebate Act (HEEHRA)​

https://www.rewiringamerica.org/policy/high-efficiency-electric-home-rebate-actCan give you a rebate, it's just not in effect yet.
Up to 1750 for the heatpump water heater. Plus the tax credit .
Might want to check into that.
I'm waiting for it myself.

 

[Mitchell-DIY-Guy]

There is a

High-Efficiency Electric Home Rebate Act (HEEHRA)​

https://www.rewiringamerica.org/policy/high-efficiency-electric-home-rebate-actCan give you a rebate, it's just not in effect yet.
Up to 1750 for the heatpump water heater. Plus the tax credit .
Might want to check into that.
I'm waiting for it myself.

That's different than the Energy Star tax credits. The Energy Star tax credit is exactly that--a tax credit and it doesn't matter WHAT your income is. It's also a tax credit, not a deduction, so after all your tax information is calculated on your 1040, the credit is then applied.

The HEEHRA is something different entirely. Designed, from the data presented, is a "point of sale rebate...low and moderate income households...electrify their homes".

If you qualify for that AND the tax credit, great.

 

[BillD]

Right, this is the tax credit I'm referring to: Heat Pump Water Heaters Tax Credit. It is not income dependent. That part I understand. I just don't see any restriction on the type of water heater I'm replacing. Did my plumber pull that out of thin air, or am I missing? I've googled it, but I haven't come up with anything.

 

[Ludington]

That's different than the Energy Star tax credits. The Energy Star tax credit is exactly that--a tax credit and it doesn't matter WHAT your income is. It's also a tax credit, not a deduction, so after all your tax information is calculated on your 1040, the credit is then applied.

The HEEHRA is something different entirely. Designed, from the data presented, is a "point of sale rebate...low and moderate income households...electrify their homes".

If you qualify for that AND the tax credit, great.

Yes, I agree... just waiting for it to implement , to see if you can just pick one up at lowes, or if ut has to be profeossionaly installed.

 

[Mitchell-DIY-Guy]

Professional Installation: yes, that may be and it may be a go/no go.

Some years ago, there was a rebate/credit available from Detroit Edison and Ford, on the installation of Level II electric car chargers. The problem was, you had to buy the charger from Ford (which was over $1,000) and you had to have it professionally installed (God only knows but it isn't cheap).

I elected to buy a Cypress charger for $250 on Amazon, install it myself with the help of dad. Required a 75' run of wire from the service panel in the basement to the garage, a breaker, and a box/plug/outlet. We chose a model with a 240V twist lock. So all we actually did was install a 240V outlet. I'd never have had the payback with the professional installation.

After two years, the cars were turned in (lease cars) and I sold the charger to a neighbor for $200.

 

[Ludington]

Professional Installation: yes, that may be and it may be a go/no go.

Some years ago, there was a rebate/credit available from Detroit Edison and Ford, on the installation of Level II electric car chargers. The problem was, you had to buy the charger from Ford (which was over $1,000) and you had to have it professionally installed (God only knows but it isn't cheap).

I elected to buy a Cypress charger for $250 on Amazon, install it myself with the help of dad. Required a 75' run of wire from the service panel in the basement to the garage, a breaker, and a box/plug/outlet. We chose a model with a 240V twist lock. So all we actually did was install a 240V outlet. I'd never have had the payback with the professional installation.

After two years, the cars were turned in (lease cars) and I sold the charger to a neighbor for $200.

Yes, I'm just waiting to see what the actual process would be and my total out of pocket.
I've got a maytag water heater now, put in in 2000. So I'm due... I will probably pick a standard one from hd or lowes and put it in myself. I don't think I can justify 1750 for a heater that costs 100 a year instead of one that costs 600 and 350 a year. So 250 savings for 7 years to break even. Might be worth it if it doesn't break, lord knows who would know how to fix it.

 

[havasu]

Sounds like all the other energy efficient tax breaks offered to all, until you reach the maximum allowance.

 

[gagecalman]

Yes, I'm just waiting to see what the actual process would be and my total out of pocket.
I've got a maytag water heater now, put in in 2000. So I'm due... I will probably pick a standard one from hd or lowes and put it in myself. I don't think I can justify 1750 for a heater that costs 100 a year instead of one that costs 600 and 350 a year. So 250 savings for 7 years to break even. Might be worth it if it doesn't break, lord knows who would know how to fix it.

That's what I did. Standard electric water heaters are so simple, Parts easy to get and replace as long as the tank holds up.
Some things are just getting too complicated.
I just installed this one from HD. 9 year warranty and 5500 watt elements for less than $700.

https://www.homedepot.com/p/Rheem-P...d-240-volt-Connection-XE50M09EL55U1/205810460

 

[Mitchell-DIY-Guy]

From an operational cost standpoint, I don't like electric water heaters (only if natural gas isn't in the home) but @Twowaxhack, @gagecalman do have it right: electric water heaters are very simple, parts readily available, service is easy, and they seem to last a long time.

I did install one for my father and sister last year, and it aside from getting the electricity to the installation location, and a wee bit of plumbing, once that was done it just started working. No worries about gas pressure, etc. Plug and play as they say. If it needs service about any plumber can do it.

 

[Ludington]

I was thinking maybe one with leak detection... or is that just a gimmick?

 

[Bird Doo Head]

BillD, don't forget to check both your electric and your natural gas supplier for discounts and rebates. Sometimes they are quite generous.

The income tax credit of 30% up to $2,000.00 for heat pump water heaters in 2023 is really a good incentive to move forward.
Plug this into the address bar to search for the models that you are considering: Product Finder — ENERGY STAR Certified Water Heaters

You do not have to itemize to receive the income tax credit. It's a pure and simple "above the line" credit, not a deduction. If your tax due is not large enough to use the whole credit, the unused portion can be carried forward to subsequent years.

The Inflation Recovers Act's program for people of certain income levels is a completely different program. You may or may not be eligible.

Five Chances To Keep More Money In Your Pocket:
Manufacturer's Rebate, Energy Tax Credit, Electric Supplier Rebate, Gas Supplier Rebate, and Inflation Recovery Act's program.

Please Enjoy Today!
Paul