Like the name implies, the One Big Beautiful Bill Act will affect many, if not all, industries. The HVAC industry will certainly be affected.
President Trump’s signature legislation passed on Thursday, July 3, after much debate, argument, and negotiation. Here is a quick look at the positives and negatives for the HVAC industry.
Positive: Families are now allowed to use 529 education savings plans to pay for career certifications, apprenticeships, and licensing programs. This includes HVAC training. In the past, 529 plans were only used for college tuition. These plans are state-sponsored investment accounts that allow money to grow tax-free. Withdrawals are also tax-free when used for qualified education expenses.
“The expansion of 529 eligibility is a huge win for our industry and for families exploring alternatives to the traditional four-year college path,” said Bart James, CEO of Air Conditioning Contractors of America (ACCA). “This change helps legitimize skilled trades as a first-choice career and not just a fallback — and that shift in perception is critical to strengthening our workforce pipeline.”
Stan Kolbe, executive director of government and political affairs at SMACNA, said this latest development is in line with a scenario they’ve been discussing with Congress for years: What if a parent saves money in a 529 for a traditional college, only for their child to decide they want to pursue a career in the trades?
“We long supported the move to allow 529 plans to assist two-year programs at community colleges, and that was helpful to many families with one child remaining at home and a significant college balance in the 529 fund,” Kolbe said. “Although more can be done, progress is being made on selling the skilled building trades careers of today, the immediate future, and the decades to come.”
Negative: On the residential side of the HVAC market, Section 25C and 25D tax incentives will be repealed for projects starting after Dec. 31, 2025. These were designed to encourage homeowners to invest in energy-efficient and clean energy improvements.
Section 25C, the energy efficiency home improvement credit, was worth up to $3,200 annually for qualifying home upgrades, and had become a key driver of energy-efficient HVAC equipment. The maximum credit that can be claimed each year is $1,200 for energy-efficient property costs and certain energy-efficient home improvements, with limits on exterior doors ($250 per door, $500 total), exterior windows and skylights ($600), and home energy audits ($150), and $2,000 per year for qualified heat pumps, water heaters, biomass stoves, or biomass boilers, per the IRS.
“The Inflation Reduction Act’s improvements to 25C do make it far more valuable for contractors, and we saw that in our recent town hall surveys, more than twice as many contractors picked the energy efficiency incentives as being their top tax priorities over things like small business taxes and individual rates,” said Sean Robertson, vice president of membership, advocacy and events at ACCA. “And among the efficiency tax incentives, 25C was also by far the most popular.”
Section 25D, the residential clean energy credit, included a 30% federal tax credit for geothermal heat pumps.
Positive: Section 199A, the qualified business income deduction, becomes permanent with enhanced benefits. This will affect HVAC contractors operating as S-corporations, partnerships, and sole proprietorships. This means contractors can continue deducting up to 20% of their qualified business income indefinitely.
The enhanced benefits include a higher income threshold. Under this new legislation, the phase out begins at $75,000 for individuals and $150,000 for married couples filing jointly. Previously, those limits were $50,000 and $100,000. This means more HVAC contractors can claim the full deduction before hitting income limits.
Negative: Commercial HVAC tax incentives are also going away, but on a different timeline. Sections 45L and 179D are set to end for projects beginning after June 30, 2026.
Section 45L offers tax credits to homebuilders and developers who construct or substantially reconstruct energy-efficient residential homes.
Section 179D, enacted in 2005 and made permanent in 2020 under bipartisan leadership, allows commercial building owners to claim deductions for investments in high-efficiency lighting, HVAC systems, and building envelopes. Supporters say the deduction has long been a linchpin for private investment in energy-saving upgrades, supporting not only job growth but also spurring innovation across engineering, manufacturing, and construction.
In a joint letter to Speaker Mike Johnson and Senate Majority Leader John Thune, Stephen J. Dodd of the International Association of Sheet Metal, Air, Rail, and Transportation Workers (SMART) and Stanley E. Kolbe, Jr. of the Sheet Metal and Air Conditioning Contractors’ National Association (SMACNA) send before the vote, stated “Section 179D is also aligned with national energy goals. It helps reduce energy demand on urban power grids, lowers long-term building operating costs, and promotes infrastructure resiliency. Weakening this provision would deliver only minor budget savings while severely disrupting private-sector projects that drive significant economic and energy efficiency benefits.