Decoding the IRA: Financial Resources for Greening Your Home
The Inflation Reduction Act made history when it became the largest clean energy related bill signed into law with climate related investments totaling nearly $370 billion.
There is a lot to unpack in the 730-page document, ranging from corporate tax law to drug price mandates to renewable energy incentives. The intricacies and sheer volume left a lot of people wondering, “what’s in it for me?” In fact, SunPower recently conducted a nationally representative survey about the IRA, and we found that more than 250 million Americans don't know it offers tax credits for making energy efficient improvements to your home.
Download Green Builder Media’s comprehensive guide to the Inflation Reduction Act for more information on programs and how to apply.
Ensuring Americans extract value from the IRA is critical. Decisions people make on a regular basis about their home and in their daily lives can collectively have an enormous impact on our environment. It’s these kitchen-table choices that will help the U.S. make progress against its climate goals quickly. And the IRA effectively provides a bank account worth $10,600, on average, for Americans to electrify their homes — helping make the green choice a much easier one.
Now, people just need a little help accessing it. We read the Inflation Reduction Act so you don’t have to. For a quick look, here are top six ways you can use it to save money on electricity bills, make your home energy more reliable and reduce your carbon footprint:
- 30% tax credit on solar energy: The Solar Investment Tax Credit (ITC) means you could get back nearly a third of the cost of any solar system purchased between 2022 and 2032 through a tax refund.
- 30% tax credit on clean energy storage: This tax credit covers 30% of the cost of a solar-powered battery that can be used to power your home in a grid outage.
- 30% tax credit each year (up to $2,000) to buy and install heat pumps and heat pump water heaters: This means if you install a heat pump water heater this year, and a heat pump next year, you will receive the 30% tax credit on each.
- There’s also a 30% tax credit (up to $600) for an electrical panel upgrade — but only if it’s installed along with another home appliance like a heat pump or heat pump water heater. So, it’s a good idea to consider doing both at once!
- Home electrification rebates provide point-of-sale consumer discounts to enable low- or moderate-income households across America to electrify their homes. Notably, households will experience the point-of-sale electrification rebates as immediate, off-the-top discounts when making qualifying electrification purchases. These rebates will be available in different states as early as the end of this year, with most rolling out throughout 2024. For eligible households, you can receive up to an $840 rebate on an induction or electric stove or an electric heat-pump clothes dryer with Energy Star approval.
- Home energy efficiency rebates enable households across America to install energy efficiency measures. These rebates will be available in different states as early as the end of this year, with most rolling out throughout 2024. For example, single family homeowners can receive up to $4,000 ($8,000 for qualifying low-income homeowners) if the efficiency measures installed achieve at least 35% home energy savings.
New energy efficient homes tax credits for builders: In addition to consumer incentives, builders can get tax credits for constructing and selling single and multi-family homes that meet certain energy efficiency criteria. For example, there is a $5,000 per housing unit tax credit for single-family homes that meet Energy Star building program eligibility and become certified under the U.S. Department of Energy’s Zero Energy Ready Home program.
For a quick reference guide, Rewiring America created a savings calculator that can help determine what you, specifically, may be eligible for based on your location, income level and housing situation. It’s never been easier and more cost-effective to electrify your home – all thanks to the Inflation Reduction Act.
Publisher’s Note: This content is made possible by our Today’s Homeowner Campaign Sponsors. These companies take sustainability seriously, in both their products and their operations. Learn more about building and buying homes that are more affordable and less resource intensive.