Title: Air Source Heat Pump Act of 2021
Policy area: Taxation

Summary:
Air Source Heat Pump Act of 2021
This bill allows a new refundable tax credit for qualified air source heat pump expenditures. The bill defines qualified air source heat pump expenditures as expenditures for property that uses an air source heat pump to heat and cool a dwelling unit located in the United States and used as the taxpayer's principal residence. The air source heat pump must also meet specified performance and other requirements.

[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[S. 891 Introduced in Senate (IS)]

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117th CONGRESS
  1st Session
                                 S. 891

 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

                             March 23, 2021

   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.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Air Source Heat Pump Act of 2021''.

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

    (a) In General.--Subpart C of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by inserting after 
section 36 the following new section:

``SEC. 36A. AIR SOURCE HEAT PUMP CREDIT.

    ``(a) Allowance of Credit.--In the case of an individual, there 
shall be allowed as a credit against the tax imposed by this chapter 
for the taxable year an amount equal to the lesser of--
            ``(1) 20 percent of any qualified air source heat pump 
        expenditures, or
            ``(2) $800.
    ``(b) Qualified Air Source Heat Pump Expenditures.--The term 
`qualified air source heat pump expenditures' means an expenditure for 
property which uses an air source heat pump, as part of a ducted or 
ductless system, to heat and cool a dwelling unit, provided that--
            ``(1) the dwelling unit is located in the United States and 
        used as the principal residence (as such term is used in 
        section 121) of the taxpayer, and
            ``(2) the air source heat pump--
                    ``(A)(i) satisfies the applicable performance 
                requirements to meet the Cold-climate Air-Source Heat 
                Pump Specification, as provided by Northeast Energy 
                Efficiency Partnerships, as in effect at the time that 
                the expenditure for such equipment is made (or any 
                successor standards provided by Northeast Energy 
                Efficiency Partnerships), or
                    ``(ii) received the most efficient certification 
                under applicable Energy Star program requirements which 
                are in effect at the time that the expenditure for such 
                property is made (or any successor standards 
                established by the Environmental Protection Agency),
                    ``(B) is installed in accordance with the Air 
                Conditioning Contractors of America HVAC Quality 
                Installation Specification (ANSI/ACCA Standard 5 QI-
                2015), or a subsequent version approved for this 
                purpose by the Secretary of Energy, and
                    ``(C) is displacing heating load previously 
                provided by an existing natural gas, propane, resistive 
                electric, or oil central heating system.
    ``(c) Special Rules.--For purposes of this section--
            ``(1) Application of certain rules.--Rules similar to the 
        rules under paragraphs (1), (5), (6), (7), and (8) of section 
        25D(e) shall apply.
            ``(2) Joint ownership.--
                    ``(A) In general.--Any expenditure otherwise 
                qualifying as a qualified air source heat pump 
                expenditure under this section shall not be treated as 
                failing to so qualify merely because such expenditure 
                was made with respect to 2 or more dwelling units.
                    ``(B) Limits applied separately.--In the case of 
                any expenditure described in subparagraph (A), the 
                amount of the credit allowable under subsection (a) 
                shall (subject to paragraph (1)) be computed separately 
                with respect to the amount of the expenditure made for 
                each dwelling unit.
            ``(3) Property financed by subsidized energy financing.--
        For purposes of determining the amount of expenditures made by 
        any individual with respect to any property, there shall not be 
        taken into account expenditures which are made from subsidized 
        energy financing (as defined in section 48(a)(4)(C)).
    ``(d) Basis Adjustments.--For purposes of this subtitle, if a 
credit is allowed under this section for any expenditure with respect 
to any property, the increase in the basis of such property which would 
(but for this subsection) result from such expenditure shall be reduced 
by the amount of the credit so allowed.
    ``(e) Denial of Double Benefit.--A credit shall not be allowed 
under this section for any expenditure for which a credit is allowed 
under section 25C.''.
    (b) Conforming Amendments.--
            (1) Section 6211(b)(4)(A) of the Internal Revenue Code of 
        1986 is amended by inserting ``36A,'' after ``36,''.
            (2) The table of sections for subpart C of part IV of 
        subchapter A of chapter 1 of such Code is amended by inserting 
        after the item relating to section 36 the following new item:

``Sec. 36A. Air source heat pump credit.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.
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