What is the Inflation Reduction Act (IRA)?
Passed in 2022, the Inflation Reduction Act is being called the single largest victory for sustainability in the history of the United States. The IRA provides funding for a number of measures advancing environmental justice, and has positioned the country at the leading edge of climate restoration and energy efficiency.
For those of us living on the planet, this is great news! Businesses, nonprofits, and government agencies are now incentivized to make sustainable choices that improve and support the health of our global population, human and otherwise.
You don’t have to own a business to take advantage of the IRA credits and rebates either —
homeowners can save more now than ever on energy efficient upgrades. Read on to learn about how the IRA is addressing climate health while reducing energy costs for families and providing opportunities for households of all income levels.
How can homeowners take advantage of the IRA?
Have you planned your home’s improvement projects for 2023? With the new year right around the corner and the IRA providing additional savings, there’s never been a better time to consider lowering the carbon footprint of your house.
Read: Rewiring America’s Guide to Electrifying Everything in Your Home.
Costs associated with energy efficient upgrades like residential solar panels and electric vehicle charging stations are mitigated by this law, making sustainability more accessible for the average American. Combined with flexible financing options from trustworthy sustainability companies and direct savings on energy costs, reaching the gold standard of household efficiency has never been easier.
Sustainability upgrades incentivized by the IRA include, but are not limited to, solar energy investments and storage, heat pumps for temperature control, and even refined insulation and circuit panels for improved efficiency.
Go deeper into the individual facets of the Inflation Reduction Act to see if your upcoming home improvement projects qualify for the generous rebates and tax credits.
Residential Clean Energy Credit
If the residential clean energy credit sounds familiar, that’s because it’s a revamped version of the residential energy efficient property credit. In addition to a new name, the credit has been boosted from 26% to 30% in savings for homeowners installing clean energy systems.
From now until 2032, individuals making improvements for sustainability in the form of solar, wind, geothermal energy, or fuel cells can get 30% of total installation costs covered by this act.
In 2033 this rate will drop down to 26%, and again to 22% in 2034 — which means homeowners have time to research reputable clean energy companies, but could miss out on the best rates if efficiency upgrades aren’t set in motion!
High-Efficiency Electric Home Rebate Act (HEERA)
As solar energy has continued to rise in popularity, expansive financing options and tax credits have made it more affordable now than ever. Even so, many families might opt for environmentally-conscious improvements with lower initial costs during their sustainability journey.
Thankfully, with the implementation of HEERA included in the IRA, lower-income households in America can still save on efficiency upgrades. The High-Efficiency Electric Home Rebate Act program covers 100% of costs associated with electrification projects for low-income families, and 50% for moderate-income households.
Qualified electrification upgrades could look like installing heat pump mini splits or heat pump water heaters, or even something as simple as upgrading the insulation in your home. While there are caveats and requirements, low-income renters and homeowners can now save directly with lowered electric bills and energy costs, and with up to 100% coverage for electrification projects.
Get more home improvement inspiration with Rewiring America’s Guide to Electrifying Everything in Your Home and the below list of more qualified electrification projects for low to moderate income renters and homeowners to consider:
Heat Pump Tax Credits
Heat pumps are quickly becoming the go-to option for efficient heating and cooling systems that lower energy costs and usage. Renters and homeowners can get better temperature control by switching from furnaces and leaky duct systems to room-based heat pumps while also claiming up to 30% back in installation, including labor costs.
In addition to this generous tax incentive, some individuals are eligible for rebates up to $8,000 for heat pump heating and cooling, and up to $1,750 for heat pump water heaters. The heat pump related savings don’t stop there, though — homeowners can also claim up to $1,200 in tax credits for tangential expenses associated with installation.
(Think: energy audits or electrical upgrades and air-sealing materials needed for heat pump systems.)
Families with incomes that are less than 80% of their state’s median household income can claim all rebates available, making upfront costs associated with heat pumps easier to manage. The heat pump tax credits made possible by the IRA are the largest and most significant saving options for homeowners, and could theoretically be combined with state-specific incentives, depending on your location.
Electric Vehicle Charging Station Tax Incentives
Even with less people on the road during the pandemic, 27% of America’s greenhouse gas emissions came from transportation in 2020. As the largest contributor to the country’s emissions, it’s no wonder electric vehicles, or EVs, are hitting the road in larger numbers than previous years.
EV owners can now save up to 30% on their residential charging stations, thanks to the IRA. By incentivizing the switch to all-electric and increasing accessibility to EVs and charging stations, this facet of the act is transforming our roads for the better.
Prospective buyers no longer need to worry about finding public EV charging stations or running out of power while driving, either. A reliable charging station at home like the CP Homeflex means you can set out already fueled up and save money on installation, all at once.
While the direct implementation of the credits and rebates available due to the Inflation Reduction Act is still being streamlined by government agencies, homeowners can start saving on home upgrades in January of 2023.
Before you take advantage of solar panel tax incentives, learn how to identify solar company scams, and schedule a consultation with a local, experienced team like Solar Smart Living. Read more about accessible sustainability improvements for your home right here, and get inspiration from the award-winning eco-home, the Camino Leon model house.