Right now we are loving the fall colors, the apple picking, and the Pumpkin Spice Lattes after a long hot DMV summer. But we’re also turning an eye toward winter weather that is surely coming down the pike. If you’re thinking about finally fixing those drafty windows or purchasing a more energy-efficient heating system, now is your time. The Inflation Reduction Act has brought about some big savings for homeowners looking to electrify their home and add energy efficiency upgrades.
If you have questions about why electrifying your home will save you money in the long run vs. natural gas, check out this recent article from the Sierra Club's wonderful Ivy Main in the Virginia Mercury.
The savings break down into two basic categories: Federal tax credits and state-administered rebates. The tax credits are available to anyone who has a tax liability -- up to $1200 per year plus $2000 for a heat pump. The rebates are only available to homeowners in low-to-moderate income brackets. Let’s break it down:
High Efficiency Electric Home Rebate Program: Up to $14,000 per household
The HEEHR rebates are made available exclusively to low-to-moderate income households. They will be administered by the states, and won’t be available until 2023, so there is still uncertainty about how people will claim them. The rebates will differ by state in the way they work, but the numbers dictated by the Inflation Reduction Act remain the same. The chart below shows the maximum amount a homeowner can get back after purchasing any of the products or upgrades.
The actual amount you can get back depends on your eligibility. Homeowners who make up to 80% of the median income for their area will be eligible for the maximum rebate amount, and homeowners making up to 150% of their area median income will be eligible for 50% of the rebate amount.
Federal Tax Credits for Home Electrification
The federal tax credits will begin in 2023, and anyone who has a tax liability is eligible. A credit will be available for up to $1200 per year for energy efficiency and weatherization projects plus $2000 for a new heat pump HVAC system. If you have more than $4000 in weatherization or energy efficiency projects you’ll want to space them out so you can get the max tax credit.
For example, you may decide to install an induction stove so that your family is no longer breathing indoor air pollution caused by your gas stove. But if you are also looking to electrify your dryer and seal or replace doors and windows, you’ll definitely end up with more than $4000 of improvements.
Any amount you spend over $4000 will exceed the $1200 limit for the tax credit in one year, not including the heat pump HVAC. So replacing the stove and dryer this year and waiting until the following year to do the weatherization would be wise. You can claim up to $1200 each year through 2032 so you can space your projects out and get it all done.
See the chart below for all of the eligible credits, and note that the $2000 HVAC credit is available on top of the $1200 max per year for the other improvements.
If you'd like to see the max amount you can qualify for, use this handy calculator from Rewiring America:
Want to learn more about the Inflation Reduction Act and the renewable energy & EV tax credits included? Check out these blog posts to continue your research:
Give us a call at 866-484-7786 or click below to get in touch. We'd love to talk through all the tax credits and celebrate the passage of the IRA with you!