A number of IRA incentives are geared towards helping people with modest incomes to make sure that everyone benefits from going green.
If you were thinking of updating your home—from A/C to hot water heater to stove—now is the time to take advantage of tax credits that will save you money as you help to save the planet.
Over a year after the passing of the Inflation Reduction Act (IRA) in August 2022, the United States government has reported strong results, creating over 170,000 jobs by its first birthday and seeing over $110 billion dollars invested in clean energy manufacturing. Improvements like these show positive signs for the future, as well as significant savings in costs with the tax credits created by this law. However, while it’s relatively clear to see the benefits provided to businesses involved in IRA provisions, the IRA can also be a boon to folks looking to green their lives.
Your Home Incentives Start with an Audit
The government recommends beginning with a professional home energy audit to ensure that energy-efficient upgrades are not sabotaged by external factors in your home—a process that, if eligible, will earn you a 30% tax credit up to $150 once you submit IRS Form 5695 alongside your taxes. The Residential Energy Services Network is one directory of certified professional energy auditors in your area and is backed by the Office of Renewable Energy. Once it’s time to start the process of greening your home, there are many steps that can be taken that are eligible for tax credits provided by the IRA.
Electrical Equipment
Investing in electrical panel or circuit upgrades—or new electrical equipment—can earn you a tax credit of 30% of the consumer cost up to $600.
Installing a fuel cell can earn you a tax credit of 30% of the consumer cost, maxing out at $500 per half kilowatt (kW) of power capacity.
Temperature Control
Installing energy-efficient air conditioning systems can earn you a tax credit of 30% of the cost up to $600.
Installing an energy-efficient air-source or geothermal heat pump can earn you a tax credit of 30% of the cost up to $2000/year. (Learn more about heat pumps at https://www.greenamerica.org/your-green-life/invest-energy-efficient-home.)
Upgrading your insulation and air sealing can earn you a tax credit of 30% of the cost up to $1,200.
Water Systems
Installing energy-efficient hot-water boilers can earn you a tax credit of 30% of the cost up to $600/year.
Installing energy-efficient heat-pump water heaters can earn you a tax credit of 30% of the cost up to $2,000/year.
Installing solar water heaters can earn you a tax credit of 30% of the cost.*
Other Eligible Upgrades
Upgrading to energy-efficient windows can earn you a tax credit of 30% of the consumer cost up to $600.
Installing energy efficient skylights can earn you a tax credit of 30% of the consumer cost up to $600.
Installing rooftop solar panels can earn you a tax credit of 30% of the consumer cost.*
Federal Assistance Programs
The Weatherization Assistance Program (WAP) can aid in reducing energy costs and implementing energy-efficient improvements for low-income households.
The Low-Income Home Energy Assistance Program (LIHEAP) can assist qualifying low-income households with their home heating and cooling bills.
Take advantage of these opportunities to green your home while taking some pressure off your wallet.
*Government websites are not listing maximum limits for rebates on these upgrades at time of writing.
Transportation Incentives
IRA-provided tax credits extend even beyond the home. If you are considering purchasing a clean vehicle, you may be eligible for a tax credit for your purchase. Learn more about clean vehicles and deciding if they could be right for you on p. 37 and 38.
There are many specific requirements for eligibility for tax credits on clean vehicle purchases. The four main requirements for qualifying are a battery capacity of at least 7 kilowatt hours, a gross vehicle weight rating of less than 14,000 pounds, a final assembly completed in North America, and to be made by a qualified manufacturer.
The vehicle must be purchased for personal use, primarily in the U.S. There are modified adjusted gross income caps—$300,000 for married couples filing jointly, $225,000 for heads of households, and $150,000 for all other filers.
For more information on eligibility requirements and available vehicles, visit https://www.fueleconomy.gov/.
Purchasing a Vehicle Now
Purchasing a new electric or fuel-cell vehicle can earn a tax credit of up to $7,500.
Purchasing a used electric or fuel-cell vehicle can earn a tax credit of up to $4,000.
Vehicles Purchased Before 2023
Even vehicles bought between 2010-2022 may be eligible for these tax credits. All-electric and plug-in hybrids bought new can earn a tax credit of up to $7,500—but this varies depending on battery capacity.
