II 

116TH CONGRESS 

2D SESSION S. 4974 

To amend the Internal Revenue Code of 1986 to establish a refundable 

tax credit for the installation of energy efficient air source heat pumps. 

IN THE SENATE OF THE UNITED STATES 

DECEMBER 8, 2020 

Mr. KING introduced the following bill; which was read twice and referred to 

the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to establish 

a refundable tax credit for the installation of energy 

efficient air source heat pumps. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Air Source Heat Pump 

5 Act of 2020’’. 

6 SEC. 2. REFUNDABLE TAX CREDIT FOR AIR SOURCE HEAT 

7 PUMPS. 

8 (a) IN GENERAL.—Subpart C of part IV of sub9 chapter A of chapter 1 of the Internal Revenue Code of 


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1 1986 is amended by inserting after section 36 the fol2 lowing new section: 

3 ‘‘SEC. 36A. AIR SOURCE HEAT PUMP CREDIT. 

4 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in5 dividual, there shall be allowed as a credit against the tax 

6 imposed by this chapter for the taxable year an amount 

7 equal to the lesser of— 

8 ‘‘(1) 20 percent of any qualified air source heat 

9 pump expenditures, or 

10 ‘‘(2) $800. 

11 ‘‘(b) QUALIFIED AIR SOURCE HEAT PUMP EXPENDI12 TURES.—The term ‘qualified air source heat pump ex13 penditures’ means an expenditure for property which uses 

14 an air source heat pump, as part of a ducted or ductless 

15 system, to heat and cool a dwelling unit, provided that— 

16 ‘‘(1) the dwelling unit is located in the United 

17 States and used as the principal residence (as such 

18 term is used in section 121) of the taxpayer, and 

19 ‘‘(2) the air source heat pump— 

20 ‘‘(A)(i) satisfies the applicable performance 

21 requirements to meet the Cold-Climate Air22 Source Heat Pump Specification, as provided 

23 by Northeast Energy Efficiency Partnerships, 

24 as in effect at the time that the expenditure for 

25 such equipment is made (or any successor 


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1 standards provided by Northeast Energy Effi2 ciency Partnerships), or 

3 ‘‘(ii) received the most efficient certifi4 cation under applicable Energy Star program 

5 requirements which are in effect at the time 

6 that the expenditure for such property is made 

7 (or any successor standards established by the 

8 Environmental Protection Agency), 

9 ‘‘(B) is installed in accordance with the Air 

10 Conditioning Contractors of America HVAC 

11 Quality Installation Specification (ANSI/ACCA 

12 Standard 5 QI–2015), or a subsequent version 

13 approved for this purpose by the Secretary of 

14 Energy, and 

15 ‘‘(C) is displacing heating load previously 

16 provided by an existing natural gas, propane, 

17 resistive electric, or oil central heating system. 

18 ‘‘(c) SPECIAL RULES.—For purposes of this sec19 tion— 

20 ‘‘(1) APPLICATION OF CERTAIN RULES.—Rules 

21 similar to the rules under paragraphs (1), (5), (6), 

22 (7), and (8) of section 25D(e) shall apply. 

23 ‘‘(2) JOINT OWNERSHIP.— 

24 ‘‘(A) IN GENERAL.—Any expenditure oth25 erwise qualifying as a qualified air source heat 


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1 pump expenditure under this section shall not 

2 be treated as failing to so qualify merely be3 cause such expenditure was made with respect 

4 to 2 or more dwelling units. 

5 ‘‘(B) LIMITS APPLIED SEPARATELY.—In 

6 the case of any expenditure described in sub7 paragraph (A), the amount of the credit allow8 able under subsection (a) shall (subject to para9 graph (1)) be computed separately with respect 

10 to the amount of the expenditure made for each 

11 dwelling unit. 

12 ‘‘(3) PROPERTY FINANCED BY SUBSIDIZED EN13 ERGY FINANCING.—For purposes of determining the 

14 amount of expenditures made by any individual with 

15 respect to any property, there shall not be taken into 

16 account expenditures which are made from sub17 sidized energy financing (as defined in section 

18 48(a)(4)(C)). 

19 ‘‘(d) BASIS ADJUSTMENTS.—For purposes of this 

20 subtitle, if a credit is allowed under this section for any 

21 expenditure with respect to any property, the increase in 

22 the basis of such property which would (but for this sub23 section) result from such expenditure shall be reduced by 

24 the amount of the credit so allowed.’’. 

25 (b) CONFORMING AMENDMENTS.— 


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1 (1) Section 6211(b)(4)(A) of the Internal Rev2 enue Code of 1986 is amended by inserting ‘‘36A,’’ 

3 after ‘‘36,’’. 

4 (2) The table of sections for subpart C of part 

5 IV of subchapter A of chapter 1 of such Code is 

6 amended by inserting after the item relating to sec7 tion 36 the following new item: 

‘‘Sec. 36A. Air source heat pump credit.’’. 

8 (c) EFFECTIVE DATE.—The amendments made by 

9 this section shall apply to taxable years beginning after 

10 the date of the enactment of this Act. 

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