Air Source Heat Pump Act of 2020

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. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Air Source Heat Pump 4 Act of 2020’’. 5 SEC. 2. REFUNDABLE TAX CREDIT FOR AIR SOURCE HEAT 6 PUMPS. 7 (a) IN GENERAL.—Subpart C of part IV of sub- 8 chapter A of chapter 1 of the Internal Revenue Code of 9 VerDate Sep 11 2014 03:08 Dec 12, 2020 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S4974.IS S4974 pbinns on DSKJLVW7X2PROD with BILLS 2 •S 4974 IS 1986 is amended by inserting after section 36 the fol- 1 lowing new section: 2 ‘‘SEC. 36A. AIR SOURCE HEAT PUMP CREDIT. 3 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in- 4 dividual, there shall be allowed as a credit against the tax 5 imposed by this chapter for the taxable year an amount 6 equal to the lesser of— 7 ‘‘(1) 20 percent of any qualified air source heat 8 pump expenditures, or 9 ‘‘(2) $800. 10 ‘‘(b) QUALIFIED AIR SOURCE HEAT PUMP EXPENDI- 11 TURES.—The term ‘qualified air source heat pump ex- 12 penditures’ means an expenditure for property which uses 13 an air source heat pump, as part of a ducted or ductless 14 system, to heat and cool a dwelling unit, provided that— 15 ‘‘(1) the dwelling unit is located in the United 16 States and used as the principal residence (as such 17 term is used in section 121) of the taxpayer, and 18 ‘‘(2) the air source heat pump— 19 ‘‘(A)(i) satisfies the applicable performance 20 requirements to meet the Cold-Climate Air- 21 Source Heat Pump Specification, as provided 22 by Northeast Energy Efficiency Partnerships, 23 as in effect at the time that the expenditure for 24 such equipment is made (or any successor 25 VerDate Sep 11 2014 03:08 Dec 12, 2020 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S4974.IS S4974 pbinns on DSKJLVW7X2PROD with BILLS 3 •S 4974 IS standards provided by Northeast Energy Effi- 1 ciency Partnerships), or 2 ‘‘(ii) received the most efficient certifi- 3 cation under applicable Energy Star program 4 requirements which are in effect at the time 5 that the expenditure for such property is made 6 (or any successor standards established by the 7 Environmental Protection Agency), 8 ‘‘(B) is installed in accordance with the Air 9 Conditioning Contractors of America HVAC 10 Quality Installation Specification (ANSI/ACCA 11 Standard 5 QI–2015), or a subsequent version 12 approved for this purpose by the Secretary of 13 Energy, and 14 ‘‘(C) is displacing heating load previously 15 provided by an existing natural gas, propane, 16 resistive electric, or oil central heating system. 17 ‘‘(c) SPECIAL RULES.—For purposes of this sec- 18 tion— 19 ‘‘(1) APPLICATION OF CERTAIN RULES.—Rules 20 similar to the rules under paragraphs (1), (5), (6), 21 (7), and (8) of section 25D(e) shall apply. 22 ‘‘(2) JOINT OWNERSHIP.— 23 ‘‘(A) IN GENERAL.—Any expenditure oth- 24 erwise qualifying as a qualified air source heat 25 VerDate Sep 11 2014 03:08 Dec 12, 2020 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S4974.IS S4974 pbinns on DSKJLVW7X2PROD with BILLS 4 •S 4974 IS pump expenditure under this section shall not 1 be treated as failing to so qualify merely be- 2 cause such expenditure was made with respect 3 to 2 or more dwelling units. 4 ‘‘(B) LIMITS APPLIED SEPARATELY.—In 5 the case of any expenditure described in sub- 6 paragraph (A), the amount of the credit allow- 7 able under subsection (a) shall (subject to para- 8 graph (1)) be computed separately with respect 9 to the amount of the expenditure made for each 10 dwelling unit. 11 ‘‘(3) PROPERTY FINANCED BY SUBSIDIZED EN- 12 ERGY FINANCING.—For purposes of determining the 13 amount of expenditures made by any individual with 14 respect to any property, there shall not be taken into 15 account expenditures which are made from sub- 16 sidized energy financing (as defined in section 17 48(a)(4)(C)). 18 ‘‘(d) BASIS ADJUSTMENTS.—For purposes of this 19 subtitle, if a credit is allowed under this section for any 20 expenditure with respect to any property, the increase in 21 the basis of such property which would (but for this sub- 22 section) result from such expenditure shall be reduced by 23 the amount of the credit so allowed.’’. 24 (b) CONFORMING AMENDMENTS.— 25 VerDate Sep 11 2014 03:08 Dec 12, 2020 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S4974.IS S4974 pbinns on DSKJLVW7X2PROD with BILLS 5 •S 4974 IS (1) Section 6211(b)(4)(A) of the Internal Rev- 1 enue Code of 1986 is amended by inserting ‘‘36A,’’ 2 after ‘‘36,’’. 3 (2) The table of sections for subpart C of part 4 IV of subchapter A of chapter 1 of such Code is 5 amended by inserting after the item relating to sec- 6 tion 36 the following new item: 7 ‘‘Sec. 36A. Air source heat pump credit.’’. (c) EFFECTIVE DATE.—The amendments made by 8 this section shall apply to taxable years beginning after 9 the date of the enactment of this Act. 10 Æ VerDate Sep 11 2014 03:08 Dec 12, 2020 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6301 E:\BILLS\S4974.IS S4974 pbinns on DSKJLVW7X2PROD with BILLS