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What Homeowners Need to Know About the Inflation Reduction Act

Homeowners may qualify for energy rebates and tax credits on home electrification projects like geothermal or air-source heat pumps, solar arrays, battery storage, and energy panel upgrades. So, what rebates are available to homeowners through the Inflation Reduction Act (IRA)?

  • Up to $8,000 for a geothermal or air-source heat pump system
  • Up to $840 for electric load service panels and electric appliances, like dryers, washers, stoves, and cooktops
  • Up to $4,000 for electrical panel upgrades
  • Up to $1,600 to insulate and seal the home tightly

Depending on tax liability, the rebates might be combined with tax credits on energy-efficient home technologies. Here's the breakdown on residential clean energy tax credits (through 2032):

  • 30 percent tax credit for a solar power system
  • 30 percent tax credit for a storage system
  • 30 percent tax credit for a geothermal heat pump system
  • 30 percent tax credit for EV charger hardware and installation
  • Up to $2,000 for an air-source heat pump
  • Up to $600 for an electrical panel upgrade
  • Up to $150 for a home energy audit

As a bonus, the bill seems to allow for someone to possibly claim both rebates and tax credits on a home project. As you consider the rebates and tax credits, keep in mind that some don't go into effect until 2023, but there are still good options available now.


Home Upgrades That Pay (With or Without Rebates and Tax Credits)


The Four Step Process to Energy Independence is right in line with the rebates and tax incentives. Here are a few ways homeowners can benefit within each step of the process.

Make Your Home Air Tight

Whether you're upgrading your home or building new, any other steps you take to improve energy efficiency won't reach their full potential if you don't properly seal your home. The goal is to keep the elements out. We recommend insulating with a combination of spray foam and cellulose insulation. Places that seem minor, like the caulking around windows, can add up to a big energy loss if there's air leaking. Luckily, parts of the Inflation Reduction Act can help you with this. Rebates and tax credits included in the bill related to making your home air tight include:

  • Up to $8,000 in rebates, or 80 percent of the project cost, for a retrofit that reduces a home's energy usage by 35 percent through insulation (or other improvements)
  • Up to $4,000 in rebates for a retrofit that reduces a home's energy usage between 20 and 35 percent
  • Up to $500 for doors and $600 for windows and skylights
  • The HOMES rebate program offers coverage for 50 percent of the project cost for items like insulation

Energy Monitoring and Load Management

We often call this step "1A," but it can be relevant at any point in your journey to energy independence, regardless if you're in a new or existing home. Although, if you are in an existing home, we do recommend installing an energy monitoring system early in the process so you know where you can make the most impact in your energy consumption. There are also load management systems that put you in charge of where your power goes. There are rebates and tax credits for energy monitoring and load management, too:

  • Up to $840 for electric load service panel upgrades
  • Up to $4,000 for electrical panel upgrades
  • Up to $150 for a home energy audit

Install a Heat Pump

While the name might lead you astray, heat pumps also provide cooling. Heating and cooling with a heat pump is the most energy efficient, cost effective way to keep a home conditioned. It also leads to the highest level of comfort for those living in the house. Heat pumps don't use fossil fuels to operate, dramatically improving the air quality in homes and elminating fire hazard risks associated with the combustion process in propane and natural gas heat sources. Geothermal heat pumps have an efficiency rating of 500 percent, making them the most energy efficient and cost effective in the heat pump category of HVAC. Here are some ways homeowners can benefit from parts of the IRA as it relates to HVAC:

  • Up to $8,000 in rebates for a heat pump, air-source or geothermal, used for space heating and cooling (and up to $1,750 for a heat pump for water heating)
  • 30 percent tax credit for a geothermal heat pump
  •  Up to $2,000 for an air-source heat pump

Generate Power with Solar

You've made your home air tight and have slashed your biggest utility expense – space heating and air conditioning – by installing a heat pump. Now you're ready to size a solar system appropriately so you can generate your own power. Solar arrays can be installed on the ground (ground mount) or on your roof (roof mount). We can help design the system so you're sure to generate the most power possible. Almost always, this means having the array south-facing if at all possible so it receives the optimal amount of sunlight throughout the day. Here are the perks homeowners receive from the IRA as it relates to solar PV:

  • 30 percent tax credit for a solar system
  • Many states over lucrative solar incentives, as well

Control Power Consumption – Store with Batteries

Storing power generated from your solar array allows you to take full advantage of the power you generate on-site. There are two primary ways that home and building owners of any size can benefit from owning a battery: Using a battery for backup power and storing energy generated during the day so it can be used at night. At this point, you've made the investment to conserve and generate your own power, and a battery allows for that energy to be used to its full potential. Like the other steps in the four step process, there are rebates and tax credits available for batteries/storage:

  • 30 percent tax credit for batteries

This brief rundown isn't all-encompassing and, as always, we strongly recommend connecting with a tax professional to determine what you might be eligible for. But, to get to that point, you might want a full system design to get a good idea of materials and labor costs. We're happy to do a free system design for geothermal, air-source, solar, or batteries/storage. You can also use this calculator, provided by Rewiring America, to estimate savings.

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