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HVAC cost reduction

When the Inflation Reduction Act went into law in 2022, it was one of the greatest climate change and clean energy initiatives the nation has ever seen. While it created many tax incentives for homeowners to invest in green energy, businesses have also faced new tax laws. 

These pointers will make navigating the laws less worrisome for HVAC service providers. 

Some Fuel Tax Credits Are Back

Under the Inflation Reduction Act, fuel tax credits that had previously been out of commission have since been reinstated and will apply until December 31st, 2024. 

They include the second-generation biofuel producer credit, the alternative fuel mixture credit, and alternative fuel credit. If you’ve used these fuel sources in your HVAC business while the tax credits were non-operable, you can retroactively claim them.

That applies to the alternative fuel mixture credit for the first two quarters of the year and the alternative fuel credit for all but the fourth quarter of 2022.

Additionally, the Inflation Reduction Act has extended the biodiesel and renewable diesel mixture credit and biodiesel and renewable diesel credit until December 31st, 2024.

The Hazardous Substance Superfund Financing Rate Is Here Again

 

The Inflation Reduction Act also restored Hazardous Substance Superfund financing, which begins on January 1st, 2023. 

If your HVAC company is required to pay a petroleum tax rate, the rate is now the petroleum Superfund tax rate or the Hazardous Substance Superfund financing rate and the petroleum oil spill tax rate or the Oil Spill Liability Trust Fund financing rate. 

The 2023 tax rate for the petroleum Superfund is $0.164 a barrel, while it’s $0.09 a barrel for the petroleum oil spill tax rate. 

You May Be Eligible for the Sustainable Aviation Fuel Credit

 

The 2022 green energy act introduced the sustainable aviation fuel or SAF credit. The credit applies to some fuel mixtures purchased from December 31st, 2022 to January 1st, 2025. You must use the fuel before that January due date to qualify. 

If a mixture qualifies, the credit is worth $1.25 a gallon. Your HVAC business can also take advantage of a supplemental credit that applies for reduction percentages. If your reduction amount is more than 50 percent, you can apply for a one-cent credit for each percent. 

You can apply for the SAF credit through your HVAC general business credit attached to your income (nonrefundable) or via your excise tax claim.

 

Be Aware That Superfund Chemical Excise Taxes Have Returned 

If your HVAC company imports chemicals, the Inflation Reduction Act reintroduced excise taxes, which apply to imported products from July 1st, 2022 onward. If you must pay the taxes, they’re due two times a month. 

The first payment is within the first 15 days of the month, then the second payment is due in the second 15 days of that month. You can use the Electronic Federal Tax Payment System to deposit the payments. EFTPS is an online system. 

While the IRS does allow for temporarily pausing the chemical tax payments for the third and fourth quarters of 2022, you must apply for extended relief by completing Notice 2023-28. If you don’t, you could face penalties for failing to pay on time.