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Beyond The Inflation Reduction Act: A Pennsylvania Guide

Kimberly Hutchings
October 24, 2023

Understanding The Inflation Reduction Act

In August of 2022, the federal government made history when President Biden signed into law the Inflation Reduction Act, allocating roughly $400 billion toward the fight against climate change and making greener, cleaner energy options more accessible to Americans across the nation.

The legislation offers funding incentives in the form of credits, grants, rebates, and other opportunities focused on energy-efficient investments like the purchase of electric vehicles,  residential clean energy systems and home electrification projects.

Drafted at a federal level, incentives will be available across the country, with state-specific implementation that allows many states to provide their residents with additional opportunities to save.

In Pennsylvania, for instance, eligible taxpayers can access no-cost weatherization upgrades related to home sealing and insulation, take advantage of free at-home energy audits and receive up to $3,000 back on the purchase of an alternative fuel vehicle.

As consumers, it’s an excellent chance to reflect on our current energy consumption habits, investigate the funding opportunities available and take action in moving towards a greener way of living.

But before we dive into the meat and potatoes of Pennsylvania-specific energy incentives, it’s a good idea to get a better understanding of how exactly these funding incentives will be offered. Let’s get into it.

Tax Credits

The first type of incentive you’ll want to be aware of is a tax credit. Tax credits work by offsetting the amount you owe on your annual tax bill.

For instance, if your amount owing is $500 and you have a tax credit worth $300, you’ll only owe $200 at the time that taxes are due.

Because tax credits are applied directly to your tax statement, they’re extremely helpful if you owe an outstanding sum but are unhelpful if your tax bill is already zero.

Any leftover credit cannot be issued in the form of a cashback refund; however, some credit opportunities allow you to carry over any remaining funds to future tax years, allowing you to take your savings a little further.

Under the Inflation Reduction Act, there are three major federal tax credit opportunities worth noting: the Residential Clean Energy Credit, the New and Previously-Owned Clean Vehicle Credit, and the Energy-Efficient Home Improvement Credit.

Tax Rebates

Most other financial incentives fall under the category of tax rebates, and unlike tax credits, these opportunities *are* issued in the form of a cashback refund. Think of them sort of like a thank you for investing in energy efficiency!

Largely, consumers should still prepare to pay for these purchases upfront, as rarely are rebates issued at the exact time of purchase, but even this is beginning to change as efforts are made to make opportunities more accessible for lower-income households.

Under the Inflation Reduction Act, there are two key federally-funded rebate opportunities to remember: the Home Energy Performance-Based, Whole House Rebate Program (HOMES), which supports retrofitting homes with improved HVAC and insulation systems, and the High-Efficiency Electric Home Rebate Act (HEEHRA) which offers funding towards home electrification projects.

Pennsylvania-Specific Energy Incentives

Okay, so now that you know a bit more about the Inflation Reduction Act and a little about how these energy incentives work, it’s time to get into the good stuff!

As we mentioned earlier, in addition to the many opportunities offered federally through the Inflation Reduction Act, many states are putting forth efforts to offer their residents further financial incentives to help take their energy investments even further — and Pennsylvania is certainly no exception!

In the sections below, you’ll find an overview of the upgrades you may want to consider making and the statewide funding opportunities that can help you get there!

Want to know more about the Inflation Reduction Act at a federal level? Click here!

Get A Home Energy Audit

If you’re looking to begin making your home more energy-friendly, starting with a home energy audit is the way to go!

During your energy audit, a qualified auditor will visit your home to conduct an in-person walkthrough, evaluating each room for energy use and offering suggestions on ways you might be able to improve, both through upgrades and shifts in your daily habits.

Before your audit, it’s important to have a baseline understanding of your current usage patterns, as this will help guide your answers to any questions your auditor may have. To start your investigation, the U.S. Department of Energy suggests asking yourself questions like:

  • How many people are at home during working hours?
  • Is every room used regularly?
  • How many people live in your home?
  • What temperature do you typically set your thermostat at during the warm and cold weather months?

After your audit is complete, your auditor will put together a final report that outlines all of their recommendations for making your property more energy-efficient. It’s a great tool to keep in your back pocket as you navigate the process of upgrading your home, helping you to determine the improvements that are going to offer you the most energy (and financial!) savings in the long run.

If you’re ready to book your own home energy audit, consider taking advantage of the following opportunities.

The Energy-Efficiency Home Improvement Credit

The Inflation Reduction Act’s Energy-Efficiency Home Improvement Credit offers existing homeowners and renters the chance to subsidize the cost of a home energy audit. Through this federally-funded credit, consumers can claim 30 percent of the cost of their audit back, up to a value of $150, and the opportunity is available all the way through until December 2032.

In terms of booking, many Pennsylvania utility providers offer low-cost home energy audits as part of their ongoing services — reach out to your provider to see what they can do for you!

Pennsylvania’s Weatherization Assistance Program (WAP)

Pennsylvania’s Weatherization Assistance Program (WAP) is designed to assist low-income households with investing in improvements to their home's energy efficiency, helping them to lower their energy bills while making their spaces safer and more comfortable to live in.

In order to qualify for the program, individuals must have an income that is at or below 200 percent of the federal poverty level, and priority is given to elderly people, disabled individuals, families with children and high energy users throughout the state.

If eligible, the program begins with a no-cost home energy audit, where your home will be assessed to identify the energy-saving measures that will be most cost-effective in improving your property's energy efficiency, from substantial upgrades to minor repairs.

You can learn more about Pennsylvania’s Weatherization Assistance Program (WAP) by clicking here.

Update Your Home’s Sealing and Insulation

Improving your home’s sealing and insulation is one of the quickest ways to make your space a healthier, comfier and more energy-efficient place to live.

Homes with poor insulation and leaky doors and windows lose hot and cold air at an elevated rate, causing heating and cooling systems to work twice as hard in an attempt to keep temperatures regulated — talk about wasted energy!

On top of this, a poorly sealed home envelope means a draftier space and increased levels of dust, pollen, and other pollutants, which is bad news for anyone with allergies (achoo!).

Fortunately, there are a few ways for qualifying Pennsylvania homeowners to save on upgrading their property’s sealing and insulation, so if you’re looking to invest, make note of the following opportunities!

Weatherization Assistance Program (WAP)

The Weatherization Assistance Program (WAP) is a federally-funded program offered through the U.S. Department of Energy that helps low-income homeowners and renters reduce their energy usage through a variety of fully-paid-for weatherization and energy-efficient home improvements, including the repair or replacement of windows and doors and the installation of window film, awnings, solar screens, insulation and more.

Qualification for the program depends on your household's average monthly income, with the guidelines for 2023 outlined in the chart below.

1 $2,430.00
2 $3,286.67
3 $4,143.33
4 $5,000.00
5 $5,856.67
6 $6,713.33
7 $7,570.00
8 $8,426.67
9 $9,283.33
10* $10,140.00
*For households over 10 individuals, add $856.67 per additional person.

You can learn more about the Weatherization Assistance Program (WAP) by clicking here.

Pennsylvania’s Weatherization Assistance Program (WAP)

Now, as we mentioned earlier, Pennsylvania’s Weatherization Assistance Program (WAP) offers financial assistance to low-income households looking to improve their home’s energy efficiency through no-cost assessments, upgrades and repairs.

The program begins with a free home energy audit to determine which measures will be most effective in reducing energy use, and many homes may qualify for a number of weatherization upgrades related to home sealing and insulation, including blower door-guided air sealing and the installation of attic, wall, basement and crawlspace insulation.

As a reminder, eligibility is based on income level, with homeowners required to be making 200 percent or less than the federal poverty level in order to qualify. The program also gives priority to elderly applicants, those living with disabilities, families with children and high energy users.

You can find out more about Pennsylvania’s Weatherization Assistance Program (WAP), including details on how to apply, through the following link.

Upgrade Your HVAC System

If improving your home’s sealing and insulation is the foundation for a more efficient space, effective heating, cooling and ventilation systems are the natural next step.

In fact, investing in a more efficient HVAC system can save the average household as much as $200 a year on utility expenses while simultaneously improving air quality and helping to make everyone more comfortable day-to-day.

Not sure whether it’s time to make the upgrade? Consider how old your system is! If you have a heat pump or air conditioner that’s over 10 years old or a furnace or boiler over 15, you may be due for an upgrade.

And if that’s the case, there may be an opportunity for you to save! Here’s how.

Pennsylvania’s Weatherization Assistance Program (WAP)

As you already know, Pennsylvania’s Weatherization Assistance Program (WAP) is designed to aid low-income households in enhancing their home’s energy efficiency through weatherization repairs and improvements recommended through a free home energy audit.

In addition to home air sealing and insulation improvements, the program also offers qualifying homeowners the chance to receive heating system modifications or replacements that may help to improve their space’s safety and efficiency.

Once again, qualification for the program is dictated by household income, with homeowners required to be making 200 percent or less than the federal poverty level in order to be eligible, with priority given to elderly community members, disabled individuals, families with children and high energy users.

You can find out more about Pennsylvania’s Weatherization Assistance Program (WAP) by clicking here.

Install Energy-Efficient Appliances

Whether you’re an existing homeowner or currently renting, one of the simplest ways to level up your home’s energy efficiency is by investing in energy-efficient appliances. And the easiest way to determine whether or not an appliance is energy-friendly? Checking for the ENERGY STAR stamp of approval!

ENERGY STAR appliances are more efficient than traditional appliances, helping you to cut back your consumption, save on energy spending and reduce harmful emissions — all without compromising on quality and function.

In order to qualify, these products must meet a set of stringent efficiency guidelines outlined by the U.S. Department of Energy and the U.S. Environmental Protection Agency.

Some of the most common upgrades include investments in energy-efficient refrigerators, freezers, dishwashers, laundry machines, and clothes dryers, and the great news is opportunities to save are plentiful when you use the following tool.

ENERGY STAR Rebate Finder

Consumers can locate rebate incentives on ENERGY STAR home appliances by using ENERGY STAR’s Rebate Finder.

To find rebates available to you, simply input your zip code into the search bar, and the Rebate Finder tool will provide you with a comprehensive list of rebates and special offers on ENERGY STAR-certified products offered by ENERGY STAR partners near you — easy!

You can access the tool by visiting the ENERGY STAR website here.

Investing in Solar

Pennsylvania currently ranks 22nd in the nation for solar energy adoption, with enough solar panels in operation to power nearly 100,000 households.

And most of this solar energy? It comes from residential systems.

You see, with roughly 179 sunny days a year (close to the nation's average), solar energy pays off, and more and more Pennsylvania homeowners are seeing the benefits of reduced energy bills, smaller carbon footprints and greater independence from the electrical grid.

The great news is, if you haven’t already made the switch, there’s never been a better time to do so — and plenty of incentives are out there to help sweeten the deal. If you’re looking to make the solar switch sometime soon, keep the following opportunities in mind.

The Pennsylvania Solar Renewable Energy Certificate (SREC) Program

The Pennsylvania Solar Renewable Energy Certificate (SREC) Program allows homeowners to earn Solar Renewable Energy Certificates (SRECs) for every 1,000 kilowatt-hours (kWh) of power their home solar energy system generates.

These certificates can then be sold to local utility companies for varying rates based on current supply and demand. That’s cash right back in your wallet for energy you’re using to power your home!

Currently, SREC market values in Pennsylvania fluctuate between $35-$50 per certificate. You can find the most recent SREC rates by visiting the SRECTrade website here.

Pennsylvania Net Metering

Solar battery storage systems are a worthwhile addition to any residential solar setup.

They allow you to store excess energy not being used to power your home for use during unexpected outages or times of peak demand when you want to go off-grid to avoid paying sky-high electrical fees.

But one of the benefits of a home solar battery storage system you may not know about? Net metering! Here’s how it works.

Net metering is a process wherein homeowners can sell their excess power back to the grid, with funds returned in the form of a credit on your monthly electrical bill. In Pennsylvania, net metering programs are available statewide, and any excess credit earned can be carried over month to month to help take your savings further.

Learn more about the net metering options available to you by contacting your local utility provider!

Purchase an Electric Vehicle

Did you know that a consumer who spends an average of $1,200 per year on gas for their car will only spend around $400 a year to power a comparable electric vehicle? That’s a savings of over 65 percent!

Add to that reduced maintenance fees and zero tailpipe emissions (a major win for the planet), and it’s no wonder why so many consumers are making the swap to alternative fuel vehicles like electric or hybrid electric options!

In fact, electric vehicle registrations in Pennsylvania rose by roughly 137 percent between 2019 and 2022 alone! And since then, electric vehicle registrations have only continued to rise — and incentives have a big role to play in making the switch easy for anyone looking to invest.

If you live in Pennsylvania, here’s what you need to know.

Alternative Fuel Vehicle (AFV) Rebate Program

Through the Pennsylvania Department of Environmental Protection (DEP), the Alternative Fuel Vehicle (AFV) Rebate Program offers qualifying residents the chance to receive up to $2,000 back on the purchase or lease of a new or pre-owned all-electric (EV), plug-in hybrid electric (PHEV), compress natural gas (CNG) or propane vehicle or electric motorcycle.

Rebates are issued on a first-come, first-served basis, and in order to receive money back, a qualifying alternative fuel vehicle must not have a purchase price exceeding $50,000, rebate applications must be filed within six months of the vehicle purchase, and consumers must fall within the program’s current income guidelines. You can find the 2023 income requirements outlined in the chart below.

1 $54,360
2 $73,240
3 $92,120
4 $111,000
5 $129,880
6 $148,760
7 $167,640
8 $186,520

If eligible, consumers can qualify for rebates of the following values, depending on the type of vehicle they are purchasing.

Electric Vehicle (New or Pre-Owned) $2,000
Plug-In Hybrid Electric Vehicle (New or Pre-Owned) $1,500
CNG, Propane or Electric Motorcycles (New or Pre-Owned) $500

Additionally, consumers may be eligible for an additional $1,000 back on their purchase if they meet low-income eligibility guidelines outlined by the U.S. Department of Health and Human Services. The low-income eligibility benchmarks for 2023 can be found documented in the following chart.

1 $27,180
2 $36,620
3 $46,060
4 $55,500
5 $64,940
6 $74,380
7 $83,820
8 $93,260

Click here to learn more about Pennsylvania’s Alternative Fuel Vehicle (AFV) Rebate Program.

Next Steps

Now that you know about the funding incentives available to you as a resident of Pennsylvania, the next step is taking action!

Start with that home energy audit to see which improvements will benefit you and your home most, explore any further opportunities available to you through your local utility provider (you’d be surprised at how many there are!), and find a licensed local contractor who can help you get the job done.

In no time, you’ll be well on your way to energy (and utility bill) savings — good luck!

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