President Biden signed the Inflation Reduction Act (IRA) into law on August 16, 2022.
The historic bill covers several issues affecting the lives of Americans today, but is dominated by investments related to clean energy and climate, totaling nearly $370 billion.
The 730-page document has a lot to explain, from the corporate tax code to drug price regulations to renewable energy rebates.
Its complexity and sheer volume have left many people confused and wondering “What’s in it for me?”
There are amazing benefits for people who want to save money on their electricity bills, make their home energy more reliable or reduce their carbon footprint.
For example, do you already have a SunPower solar system but are considering adding a SunVault storage system.
Power outage? Starting in 2023, solar cell purchases are eligible for a 30% tax credit.
It’s not surprising that there may be additional benefits and some restrictions depending on your income level, location, or other personal factors.
To help illustrate how to get the most out of the bill, we’ll show real-life scenarios of people planning their own tax breaks, rebates, and incentives in the coming weeks.
1、30% tax credit on solar systems. The solar investment tax credit means you could get back nearly a third of the cost of your system if purchased between 2022 and 2032.
2、30% tax credit on energy storage technologies. This credit covers batteries that run on solar energy that can be used to power your home in a grid outage.
3、Tax credits for home builders. With these credits for builders，we can expect to see more clean energy homes on the market.
4、Up to $7500 tax credit on electric vehicles（EVs. Qualified taxpayers who purchase a car that meets certain conditions could receive this credit.
5、30% tax credit on EV chargers.For qualified taxpayers， this credit is great news-especially since EV drivers charger their cars at home 80% of the time.
6、$8000 rebate on heat pumps. if you meet certain income requirements, you could be eligible for a rebate when installing a heat pump which, contrary to its name, can be used to both heat and cool your home.
7. $1750 rebate on heat pump water heaters . Changing the way you heat water in your home could get you this rebate, provided you meet certain income requirements
8. $840 rebate on electric stoves,cooktops, ranges and ovens,if you qualify for these rebates, this could be the perfect time to make your kitchen more energy efficient
9. Up to $4000 rebate on breaker box upgrades and $2500 rebate on electrical wiring.Need to make some home repairs before switching to renewable energy?
You could be eligible for rebates on these upgrades that might be required before adding a solar system
10. Cleaner air, With all these incentives in place, the White House expects a 40% cut in greenhouse emissions from 2005 levels by the end of the decade.
Take advantage of rebate programs for energy efficiency upgrades.
While tax breaks help incentivize efficiency upgrades, the high up-front costs of these projects still put them out of reach for many families.
Thankfully, two new rebate programs established under the Inflation Reduction Act aim to cut sticker prices for climate-friendly renovations and appliances, with a larger portion of the benefits going to low- to moderate-income families.
An important note: You cannot claim the same renovation project twice.
What these rebate programs cover: The HOMES (Home Owner Managing Energy Savings) Rebate Program gets you cash back by shrinking your overall home energy use through weatherization renovations, like adding insulation, or by installing more efficient appliances, like heat pump clothes dryers.
The amount you can get back depends on how much energy you’ve saved, how you prove those energy savings (through either modeling, which requires computer software, or measured energy savings), and your household income. Save more energy, get more cash.
Plus, low- and moderate-income households qualify for double the rebate amount and are eligible for up to 80 percent of project costs.
That’s $8,000 max if you cut energy use by 35 percent and $4,000 max if you cut energy use by 20 percent.
The “High-Efficiency Electric Home Rebate Act” offers low- to medium-income families as much as $14,000 per year in point-of-sale discounts for electrification projects—including up to $8,000 for a heat pump for space heating and cooling, $840 for an electric stove, and $1,600 for an insulation project.
When they start and end: The rebates are expected to start in 2023 and run until September 30, 2031.
However, these programs are run by the states, and so they may get up and running at different times. Information on how to claim your rebate is not yet available.
Who qualifies: For the HOMES Rebate Program, everyone qualifies; however, low- to medium-income households can earn more cash back.
For the High-Efficiency Electric Home Rebate Act, only low- to medium-income families qualify. Medium-income is defined as a household making up to 150 percent of its area’s median income.
Low-income is defined as making less than 80 percent of its area’s median income.