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Beyond The Inflation Reduction Act: An Illinois Guide

Kimberly Hutchings
October 24, 2023

Understanding The Inflation Reduction Act

Last August marked the passing of the Inflation Reduction Act, the single most significant piece of action ever taken by Congress in combating today’s climate crisis.

The legislation builds on the 2021 Bipartisan Infrastructure Law and allocates roughly $400 billion in funding toward growing America’s clean energy economy and investing in a greener tomorrow. The various financial incentives offered through the act support initiatives such as the purchase of electric vehicles, home electrification projects and investments in clean energy sources like solar power.

Drafted federally, opportunities offered through the Inflation Reduction Act will be available across the country, but their implementation will occur at a state level, with many states providing additional incentives to help their residents take their savings even further.

For instance, in Illinois, taxpayers can save an additional $4,000 on the purchase of an all-electric vehicle and receive up to $16,000 in no-cost home weatherization upgrades like HVAC improvements, enhanced insulation and more through various state-specific incentives — talk about some major wins!

As consumers, these opportunities offer the perfect chance to reflect on our current energy habits, identify areas where we can improve and take advantage of the funding available to help make these home and lifestyle changes more affordable.

Before we dive into the nitty-gritty details of statewide incentives offered in Illinois, though, there are two types of funding opportunities you’ll want to know a bit more about.

Tax Credits

Tax credits help by offsetting the amount you owe on your annual tax bill. They’re applied directly to your tax statement and work solely as a means of reducing the amount you have to pay.

This makes them hugely beneficial in the event that you have an amount owing but rather unhelpful if you do not. Here’s an example.

Say you have a tax bill of $3,000 but qualify for a tax credit of $4,500. Your available tax credit will effectively reduce your bill to zero, but the leftover $1,500 will remain unused. In some instances, this leftover funding can be carried over and applied to future years, but this is not always the case.

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

The other type of financial incentive you’ll want to pay attention to are tax rebates.

Unlike tax credits, which only work if you have an amount owing on your annual income taxes, tax rebates are issued in the form of a cashback refund, helping to directly reduce the costs associated with your energy-saving investments.

While tax rebates can help greatly in making clean energy investments more affordable, consumers should still be prepared to pay for these purchases upfront, as it’s not common for rebates to be applied directly at the time of purchase — although this is starting to change as efforts are made to make opportunities more accessible to 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.

Illinois-Specific Energy Incentives

Now, it’s time to get into the good stuff! As we mentioned earlier, while the Inflation Reduction Act was drafted at a federal level, its implementation will be state-specific, with many states, including Illinois, offering additional opportunities for their residents to save from water heater improvements to investments in energy-efficient appliances.

Below is an overview of the upgrades you may want to consider making and their associated statewide funding opportunities.

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

Get A Home Energy Audit

If you’re not sure where to begin on your clean energy journey, a home energy audit is an excellent place to start!

During a home energy audit, a licensed auditor will come to your residence to conduct an in-person walkthrough, taking you through each room to assess energy use, discuss your daily habits and offer recommendations on ways that you might be able to upgrade or improve.

Before your auditor arrives, it's a good idea to consider the ways that energy is currently used in your home. To kick off your reflection, the U.S. Department of Energy recommends asking yourself the following questions:

  • 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?

Once your audit is complete, your auditor will put together a final report for your household, outlining the changes that will help level up your home’s energy efficiency the most. It’s a great tool to refer back to as you navigate the energy improvement process, helping you choose the upgrades that will offer the most energy (and financial!) savings while hopefully scoring you some added funding incentives along the way!

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, up to a value of $150, now through December 2032.

Update Your Home’s Sealing and Insulation

It might not be your first guess, but a poorly sealed home can be one of the biggest culprits behind wasted energy. Bad insulation and leaky doors and windows can cause hot and cold air to seep into the outdoors, triggering your HVAC system to work overtime in an attempt to keep temperatures regulated.

The result? Draftier, noisier, more humid homes — and energy bills through the roof!

Luckily, investing in a few home weatherization upgrades can make a major difference to both your comfort and energy spending, and there are a number of incentives out there that can help you save along the way!

If you’re looking to improve your home’s sealing and insulation, consider exploring the following two programs before you make the investment.

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.

Illinois Home Weatherization Assistance Program (IHWAP)

The Illinois Home Weatherization Assistance Program (IHWAP) assists low-income households in reducing their energy consumption by offering fully-funded weatherization upgrades, including those related to air sealing, attic and wall insulation.

Eligibility for the program is based on the total combined annual income of your household.

In order to qualify, the combined income level for your household must be at or below 150 percent of the current federal poverty level using State funds or 200 percent using HHS and DOE Funds.

The exact qualifying income levels for 2023 can be found outlined in the chart below.

(State Funds)
(HHS and DOE Funds)
1 $18,735 $24,980
2 $25,365 $33,820
3 $31,995 $42,660
4 $38,625 $51,550
5 $45,255 $60,340
6 $51,885 $69,180
7 $58,515 $78,020
8* $65,145 $86,860
*150% Level: For households over eight members, add $6,630 per person.
200% Level: For households over eight members, add $8,840 per person.

If eligible, households can receive a total of up to $15,000 in funding toward energy-related weatherization upgrades and repair work and a maximum of $3,500 toward qualifying health and safety-related measures. You can learn more about the program by clicking here.

Upgrade Your HVAC System

Did you know that heating and cooling costs can account for nearly half of the average household's energy expenses? It’s true! But investing in more efficient HVAC equipment has the potential to reduce your energy expenses significantly *and* it can make your home a whole lot more comfortable along the way!

As a good rule of thumb, you should consider upgrading your heat pump or air conditioner when the systems are over 10 years old and your furnace or boiler after 15 years.

If your home’s due for some HVAC improvements, here’s what you’ll want to know.

Illinois Home Weatherization Assistance Program (IHWAP)

In addition to fully-funded upgrades related to air sealing and insulation, the Illinois Home Weatherization Assistance Program (IHWAP) offers low-income households the opportunity to repair or replace their HVAC equipment with more efficient models and implement ventilation and moisture control measures at no cost.

Once again, qualification for the program is based on your household’s combined annual income, with current maximum eligibility levels calculated at 150 percent of the federal poverty level for households using State funds and 200 percent for those using DOE and HHS funding.

The maximum values for combined household annual income in 2023 can be found documented in the chart below.

(State Funds)
(HHS and DOE Funds)
1 $18,735 $24,980
2 $25,365 $33,820
3 $31,995 $42,660
4 $38,625 $51,550
5 $45,255 $60,340
6 $51,885 $69,180
7 $58,515 $78,020
8* $65,145 $86,860
*150% Level: For households over eight members, add $6,630 per person.
200% Level: For households over eight members, add $8,840 per person.

If eligible, households can receive a combined total of up to $15,000 toward qualifying energy-related weatherization improvements and repair work as well as up to $3,500 toward measures related to health and safety.

You can find out more about the Illinois Home Weatherization Assistance Program (IHWAP), including how to apply, by clicking the following link.

Replace Your Water Heater

Did you know that water heating can account for nearly one-quarter of a typical household’s energy consumption? Yikes!

We’re all guilty of taking a shower that’s just a *little* too long, but finding ways to reduce your usage can have a massive impact on your annual energy spending! And it goes beyond simply reducing your usage. Simple acts like turning down the temperature on your hot water heater can save you as much as $60 a year on standby heating, and installing a low-flow faucet or showerhead can reduce water waste by up to 60 percent!

But the most effective way to bring down your home’s water heating expenses? Investing in a more efficient system — especially if your water heater is over 15 years old. Fortunately, there are plenty of energy-efficient water heating models on the market today, from solar and heat pump options to tankless systems, and current funding opportunities are making it easier than ever to invest.

If you’re looking to upgrade your home water heating setup, consider the following.

Illinois Home Weatherization Assistance Program (IHWAP)

As we’ve already discussed, the Illinois Home Weatherization Assistance Program (IHWAP) assists low-income households by providing no-cost home sealing, insulation and HVAC upgrades, but the program’s benefits don’t end there! Eligible households can also take advantage of fully-funded water heater repairs and replacements to aid in their energy conservation efforts.

As a reminder, qualification is based on a household’s combined annual income and in order to be eligible, a household must have a combined maximum annual income no greater than 150 percent of the current federal poverty level using State funds and no greater than 200 percent using HHS and DOE funds.

For reference, the current combined maximum household income levels for 2023 are outlined in the chart below.

(State Funds)
(HHS and DOE Funds)
1 $18,735 $24,980
2 $25,365 $33,820
3 $31,995 $42,660
4 $38,625 $51,550
5 $45,255 $60,340
6 $51,885 $69,180
7 $58,515 $78,020
8* $65,145 $86,860
*150% Level: For households over eight members, add $6,630 per person.
200% Level: For households over eight members, add $8,840 per person.

If eligible, your household could receive up to $15,000 in energy-related home improvements and repairs, including those related to water heating, and as much as $3,500 toward the implementation of home health and safety measures. Learn more about the Illinois Home Weatherization Assistance Program (IHWAP) by clicking here.

Install Energy-Efficient Appliances

One of the easiest ways for households to level up their energy savings is through investments in energy-efficient appliances, and the best part is, these upgrades are almost always renter-friendly!

The first thing you’ll want to look for when investing in any energy-efficient appliance is the ENERGY STAR stamp of approval.

ENERGY STAR-certified appliances are more efficient (and equally effective) alternatives to traditional appliance models, having met a set of strict energy-efficiency standards set forth by the U.S. Department of Energy and the U.S. Environmental Protection Agency. Their increased efficiency not only means they use less energy (hello, utility savings!), but they also produce less harmful emissions, which is a major win for the planet too!

As a resident of Illinois, here’s how you can make the appliance upgrades you want to make and save a little money in the process.

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.

Illinois Home Weatherization Assistance Program (IHWAP)

As we already know, the Illinois Home Weatherization Assistance Program (IHWAP) is designed to help low-income households reduce their energy consumption and make their homes more efficient — and in addition to the program benefits we mentioned earlier, qualifying households can take advantage of no-cost lighting and refrigerator replacements that help to reduce their home's electric base load.

Currently, in order to qualify, households must have a combined annual income that is 150 percent or less than the current federal poverty level using State funds or 200 percent or less using HHS and DOE funds, with the current maximum income levels for 2023 outlined in the chart below.

(State Funds)
(HHS and DOE Funds)
1 $18,735 $24,980
2 $25,365 $33,820
3 $31,995 $42,660
4 $38,625 $51,550
5 $45,255 $60,340
6 $51,885 $69,180
7 $58,515 $78,020
8* $65,145 $86,860
*150% Level: For households over eight members, add $6,630 per person.
200% Level: For households over eight members, add $8,840 per person.

If eligible, households can take advantage of upgrades up to a total value of $15,000 on energy-related weatherization and repair work as well as up to $3,500 in home health and safety-related measures. You can learn more about the program, including details on how to apply, through the following link.

Invest in Solar

Currently, Illinois ranks 24th in the nation for solar adoption, with enough solar panels installed to power 98,400 homes.

To be in the top 50 percent of states is awesome, but there’s plenty of room to take investments in solar energy even further, and the wide range of benefits make a pretty good case for why solar is the way to go.

For starters, a home solar system can save the average family as much as $300 every year on energy expenses (that’s roughly $9,000 over the system’s lifetime)! Solar panels can also increase the property value of your home, they’re functional in a wide range of climates and they offer a cleaner way to power your lifestyle, which benefits the planet big time!

Plus, if you decide to invest in a solar battery storage system, you can store excess solar power generated throughout the day and keep the power in reserve for use in the event of an unexpected outage, to go off the grid during peak hours when electricity is most expensive, or sell it back to the grid for a credit on your monthly utility bill (more on this last one down below!).

For Illinois residents, there are a number of funding incentives available that offer the chance for consumers to save on their investments in solar energy. Here are the ones you’ll want to make note of.

Illinois Shines

Illinois Shines is an incentive program that makes investing in solar energy more affordable for taxpayers while supporting the State’s overall goal of operating on 40 percent renewable energy by the year 2030.

The program has two ways to participate, Distributed Generation and Community Solar.

Through the Distributed Generation pathway, consumers can save through Solar Renewable Energy Credits (SCRECs), which are earned through the installation and operation of a home solar energy system. This is how it works.

Illinois utility companies are required to have 25 percent of their energy generated by renewable resources by 2025 (as outlined in the Illinois Commerce Commission’s Renewable Portfolio Standards Requirements), and they can work towards meeting this minimum by purchasing SRECs directly from distributed generation projects (like your at-home solar system!).

One SREC is equivalent to 1 megawatt hour (or 1,000 kilowatt-hours) and can be sold to utility companies at the current market rate which varies between $3.50 to $400. Awesome! So, what’s the catch? Well, SRECs are distributed to solar vendors, not consumers directly, which means it's at the discretion of your vendor to pass along a portion of this incentive to you.

That’s why vendors are required to provide a Disclosure Form which documents all costs associated with system installation and maintenance as well as any portion of the SREC funding they intend to share. Shopping around with different vendors before starting your project is essential to see who’s currently offering the best opportunity to save!

You can read more about the Illinois Shines Distributed Generation incentives by clicking here.

Additionally, Illinois Shines offers a Community Solar program where households can save on their monthly electric bill by subscribing to a community solar project in their region.

The program works by having consumers pay a monthly subscription fee which helps to support a chosen solar project in their utility service territory, and in exchange, they’ll receive a credit applied directly to their electrical bill — hello, savings!

Fees and contract terms can vary between solar subscription providers, so it's important to investigate the different options available within your electric utility service territory before locking anything in.

You can learn more about the Illinois Shines’ Community Solar pathway by clicking here.

Illinois Solar For All (ILSFA)

Illinois Solar For All (ILSFA) is another statewide program that offers two unique pathways for qualifying homeowners and renters to access solar energy resources and save on their monthly energy spending.

The first way that residents can participate is through the Residential Solar pathway, which allows income-eligible single-family homeowners and owners of multi-family residential buildings the chance to install onsite solar energy systems with no up-front costs.

In order to be eligible, households must have a combined income level that is 80 percent or less than the Area Median Income, and you can find out where you fall by using this handy tool here!

After installation, property owners can save further through discounted maintenance costs and fees. Through the program, these expenses are regulated not to exceed 50 percent of the total value of the home solar system. This means if your system generates $150 in power each month, you’ll only be charged a maximum of $75 by your solar vendor for maintenance and operations.

For renters, benefits are accessed indirectly through measures like reduced or stabilized rent or unit upgrades which must be provided by the property owner as a prerequisite to qualifying for the program.

In order for your property to be eligible for a solar installation, the following general building requirements must be met as well (although a complete site assessment by an ILSFA Approved Vendor will be required before the project can begin).

The roof must be in good condition and will not need to be replaced within 15 years.
The foundation will need to be able to support the solar array.
The roof should be relatively free from shading or other obstructions.
A modern electrical panel must be present. The foundation cannot be a high flood risk.

If eligible, the average single-family homeowner can save over $1000 every year on electrical spending — win!

The program’s second option for solar savings comes through the Community Solar pathway. Community solar programs allow homeowners and renters to benefit from solar energy resources without having to install solar energy systems directly on their property.

Instead, community solar offers households the chance to subscribe to nearby solar projects installed at a site served by their local utility. In exchange for subscribing, consumers will receive a credit on their monthly utility bill that is at least 50 percent of the value generated by their chosen solar project. For instance, if your solar system generates your household $150 each month in power, you’ll receive at least $75 of that back as a discount applied to your bill. That’s guaranteed savings every. single. month. — sign us up!

Similar to the program’s Residential Solar pathway, households must make 80 percent or less than the Area’s Median Income level in order to qualify — and you can check your eligibility by clicking here!

Want to know more about the Illinois Solar for All (ILSFA) program and locate an Approved Vendor near you? Access everything you need to know through the following link.

Illinois Net Metering

Now, as we mentioned earlier, Illinois homeowners can benefit from a solar battery storage system by selling excess power back to the grid. Curiosity sparked? Let us explain.

The process is called net metering, and it works by selling any solar energy you don’t use to power your home back to the grid in exchange for credit on your monthly energy bill. As a consumer, you benefit from added savings, and utility companies benefit from added power which helps to offset grid strain during times of high demand.

If you produce more electricity than you use in any given month, additional credits will roll over to future months, allowing you to apply those savings further. However, leftover credits will expire once per year, in either April or October, at which point you will be reset to zero and start to bank credit again.

Currently, net metering incentives are offered in Illinois to customers of Commonwealth Edison (ComEd), Ameren Illinois Utilities and the MidAmerican Energy Company. Learn more about the current offerings through the Citizens’ Utility Board here.

Illinois Solar Property Tax Exemption

One of the perks of a home solar energy system is increased property value. But, like with most investments that increase your property value, these improvements also mean increased property taxes are on the way.

Fortunately, there’s good news for residents of Illinois because homeowners can qualify for a property tax exemption on any active (think solar panels) or passive (think sunrooms) solar installations! This means your investments will increase your property value without increasing your annual property taxes — yes, please!

Purchase an Electric Vehicle

As of July 2023, Illinois has 66,680 electric vehicles registered across the state — and that number is on the rise. In fact, in 2020, that number was just 26,000, equalling an increase of over 250 percent in only three years!

The Inflation Reduction Act offers some awesome incentives that are making it more accessible than ever before for consumers to make the investment in zero-emissions transportation, and Illinois residents can take their savings even further with the addition of a statewide rebate program offered through the Illinois Environmental Protection Agency.

Here are all the details.

Illinois Electric Vehicle Rebate Program

The Illinois Electric Vehicle Rebate Program offers money back on the purchase of a new or used all-electric vehicle or motorcycle with funding subject to availability on a first-come, first-served basis, with low-income applicants receiving top priority.

Rebate opportunities are valued at $4,000 on the purchase of new or used all-electric vehicles and $1,500 on the purchase of an all-electric motorcycle.

Applicants must apply within 90 days of purchasing their vehicle, during an open rebate cycle, with the next cycle of funding opening on November 1, 2023 and closing on January 31, 2024.

Additionally, qualifying vehicle purchases must meet the following eligibility requirements.

The purchaser must reside in Illinois at the time of vehicle purchase and at the time the rebate is issued.
The vehicle must be purchased from a dealer located in Illinois and licensed by the Illinois Secretary of State. Rented or leased vehicles do not qualify for the rebate.
The vehicle cannot have been the subject of a previous EV rebate under this program in Illinois.
Individuals can only receive one rebate.
The rebate amount cannot exceed the purchase price of the vehicle.
The purchaser must retain ownership of the vehicle for a minimum of 12 consecutive months immediately after the vehicle purchase date.

You can find out more about the Illinois Electric Vehicle Rebate Program, including more details on how to apply during the next funding cycle, through the following link.

Next Steps

Now that you know what statewide incentives are available to you as a resident of Illinois, it’s time to take the next steps!

Take some time to consider which incentives will benefit your household most (this is where that home energy audit comes in handy), investigate any additional incentives that may be offered directly through your utility provider (you’d be surprised how many there can be!), and find a licensed contractor to get the job done.

Within no time, you’ll be well on your way to being a clean energy expert!

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