Corey,
Look beyond the local stuff.
There are three potentially big savings incentives you can claim thanks to the Inflation Reduction Act.
1) The
(EEHIC)
The EEHIC is a federal tax credit that's worth 30% of the cost of qualified energy efficient home improvements, up to a maximum of $3,200 per year. That’s a nice savings to offset those big replacement price tags.
And since the EEHIC is available through 2032, it means you could spread out home improvement costs over the next 10 years to maximize those savings. (Note: After 2024 you can only get the credit if the purchased item has a product identification number and you include the number on your tax return.)
There are some stipulations to claiming the credit of course. To qualify, improvements must be made to your primary residence and must meet certain energy efficiency standards.
Plus, it's important to note that only certain kinds of upgrades actually qualify for the credit. Things like installing new insulation, replacing windows, upgrading your HVAC system, or even adding solar panels.
Figuring out which improvements to make can be tricky. But you don’t have to go at it blind. You could also get a home energy audit to see what actually needs updating. And, that expense also qualifies for the EEHIC.
2) The (RCEC)
This credit was set to expire in 2024 but the Inflation Reduction Act renewed it through 2034. Since the RCEC is a state-level tax credit it’s only available in some states and the amount of the credit varies from state to state — but it can be as much as $5,000 in some places.
Similar to the EEHIC, the RCEC gives you up to 30% of the expense for installing new energy regulating systems including solar, wind, geothermal, biomass, and fuel cell power.
However, keep in mind that it will no longer cover bio-mass furnaces and water heaters. But it will cover battery-storage technology (up to a certain capacity). For a more complete list of what does and does not qualify, the IRS has some FAQs.
3) The
While not a tax credit, these rebates can be a boost when you’re making improvements, particularly with your electric appliances. Eligibility depends on your family's income (should be below 150% of the median for your area).
Qualifying homeowners can get rebates for stoves and ovens (840), electric wiring (2,500), insulation/air sealing/ventilation (1,600), and heating or cooling with a heat pump (8,000).
Keep in mind that certain limits apply with these depending on your income (we can discuss these more), and the rebates may not be available in your area.
According to the Inflation Reduction Act, a total of $4.5 billion in rebates will be given out to families by state and tribal governments that create their own qualifying programs. The funds will be available up until September 30, 2031.
If you’re making plans to replace things in your home, especially appliances, you’ll want to see if you can get some money back on what you spend.
