I love that expression. There are lots of explanations of the saying, but I take it to mean (and I assume most do) that it is meant to describe a big talker – one who says a lot but doesn’t really have/do much to back it up.
As the dust has begun to settle from the Inflation Reduction Act (I always laugh at that title), that saying keeps going through my head.
There are a lot of things in the IRA that are HVAC related and one of them was the extension and expansion of 25C Tax Credits. Before I go any further, a short primer on tax credits.
To receive this tax credit (to be technical, it is called a Non-Refundable Tax Credit) you have to actually owe taxes. If you receive money back from the government, you don’t get to add money back. So, basically, it is a deduction from taxes owed. Only.
I did a quick bit of research and was shocked to find that 75% of American tax filers receive money back after they file their taxes. I also had no clue that many Americans use their taxes as a sort of “savings account”. I always attempt to straddle the line of zero because hey, its my money, and I feel that I can do better than the government using it over that certain period of time between when I earn it and when I file my taxes. But hey, that’s just me.
Anyways, the extension/expansion of the 25C tax credits for improving the efficiency of your homes HVAC equipment won’t affect at least 75% of the population of the USA. On top of this, when you figure in the people who don’t pay taxes at all since they are in lower income brackets, that has to push the number well over 80%. You wouldn’t believe the amount of press in my industry that the 25C issue is getting. Already you can see what is going on with the major players here, here, here, here, and here, just to show you a few.
What is more is that they just came out with the minimum equipment standards to be eligible for the 25C credits. While you would get a max $2000 tax credit for a heat pump installation, the cost of that installed system in most residences, at my best guess, would be upwards of ten to fifteen thousand dollars, maybe more. I have to guess at this point because the major manufacturer that I represent doesn’t even have a qualifying piece of equipment available for this incentive (supposedly 1q 2023). I haven’t looked at competitors, but assume they are in the same boat.
To say that I’m unimpressed by the 25C stuff would be an understatement. Eliminating 80% of the market off the top doesn’t exactly make me spring out of bed in the morning especially when I am at war with all of my competitors all day anyways. We will make our contractors aware of these credits and some may use it, but in general, it will just all go away I’m sure. Add to this the coming recession and entry level will be where the winners play, at least in my opinion, in 2023.
There is much more in the IRA to talk about that is HVAC related, but I think I will save some of that for another time.