Last August, Congress passed a piece of legislation known as the Inflation Reduction Act, which marked the most notable piece of action ever taken in the U.S. toward supporting clean energy initiatives, fighting the climate crisis and making it more accessible for each of us to make our lives more energy efficient.
Within the act, new funding was established that empowers consumers to make more sustainable lifestyle choices while reducing the financial impact of these investments. The funding, which equates to billions of dollars in incentives, comes in two forms: tax credits and rebates, including many that support home electrification efforts under the High-Efficiency Electric Home Rebate Act (HEEHRA).
Tax credits became available on January 1, 2023, and are readily available to be applied this coming tax season — but the timeline for rebate opportunities is still up in the air. It's expected that the U.S. Department of Energy will issue guidance later this year on how states should action these rebate policies, but it will still take some time to see this guidance set in motion.
The good news, though? There's plenty you can do to start planning ahead now, and Canary Media recently put together a great guide to help you begin. Keep reading for a few key takeaways!
The first thing you'll want to establish is whether you’re eligible for any of the HEEHRA rebate opportunities. The incentives focus on supporting homeowners and renters in low- and moderate-income households, providing thousands of dollars in instant point-of-sale rebate opportunities for home electrification upgrades. The rebates cover 100% of specified project costs for low-income families and 50% for moderate-income households.
But what qualifies as a low- or moderate-income household? Well, it differs by state! According to the U.S. Department of Housing and Urban Development (HUD), a low-income household is defined as any household making 80% or less than the state's median family income, and a moderate-income household encompasses anyone making 80%-150% of this same median value. Find out where you fall by using this handy tool from HUD!
Depending on where you fall as either a low- or moderate-income household, you could qualify for up to $14,000 in immediate point-of-sale rebate opportunities on your home electrification projects. That’s instant money back in your pocket simply for investing in friendlier energy alternatives! Sound intriguing? We think so!
Okay, so you've taken the first step and found out you qualify. Hooray! What's next? The next step in planning is to look at your home's current energy consumption practices and identify the areas where upgrades and improvements will be most beneficial!
A great place to start is a home energy audit. During a home energy audit, a professional will visit your home to conduct a walk-through, assessing your daily habits and each room in your home for energy use and opportunities for efficiency upgrades. Fortunately, the Inflation Reduction Act now offers the chance to save on these audits with a tax credit of 30 percent of the cost of your audit up to a value of $150.
Still, if you want to avoid conducting a professional home energy audit (although it's the best way to pinpoint any problems), there are plenty of ways you can take a do-it-yourself approach to assess your energy use too. The U.S. Department of Energy has an excellent step-by-step framework that takes you through everything you'll want to check, from locating air leaks to examining the efficiency of your current appliances and electronics — click here to find it!
After you've assessed your home, you'll be able to identify gaps in energy efficiency and make a list of the most worthwhile investments to reduce your impact (and your energy bill). Keep in mind, though, as we mentioned before, rebates available under HEEHRA look specifically at electrification upgrades, so focus on qualifying investments like the following:
Once you've identified the upgrades you want to make in your home, you'll want to ensure your home's electrical panel is equipped to handle the increase in electrical flow.
Many smaller homes, or those that are a little older, run on 60- or 100-amp electrical panels that may not be able to provide the amount of electricity required to power newer appliances and a larger amount of electricity. Comparatively, many newer homes are equipped with 200-amp panels that will work just fine for these upgrades.
Investigate your home's current electrical panel set-up before moving forward to ensure you're equipped for success. The average cost of panel upgrades can range from $1,300-$3,000, with pricing dependent on factors like panel size and how extensive the installation is. Fortunately, HEEHRA will cover electrical panel upgrades up to $4,000 as part of the rebate program, which helps to make this critical first step much more affordable.
Finally, consider exploring other methods of financial assistance, beyond the IRA tax rebates, when planning to level up your home's energy efficiency.
The IRA's tax credit program is a great place to start with plenty of opportunities to claim compensation on some of your efficiency investments. However, remember that tax credits, unlike rebates, operate by offsetting your tax bill, reducing your amount owing rather than providing a direct refund. Because of this, if you don't owe much money come tax season, you may not be able to reap many benefits from these credit opportunities.
However, tax credits are only one of the ways to access additional financial assistance. You can also see if your state has any established Green Banks that may provide further financing opportunities. Green Banks are mission-driven institutions focused on deploying clean energy rather than maximizing profits and are specifically created to address climate change by helping expedite the transition to clean energy sources. Their programs enable consumers to access financial assistance such as low-interest loans with fixed monthly payments that help to further support home electrification projects by spreading out the costs associated with remaining expenses not covered under the HEEHRA rebates and IRA tax credits.
Okay, so you've put a plan in motion to make the most of the upcoming IRA rebates, and you're patiently preparing to begin your home electrification process — but what can you do right now to help both the planet *and* your wallet? Become an OhmConnect member!
OhmConnect is a free program that helps you make the most of your home energy usage, and the process is simple. They'll send you a text or email when electricity costs spike in your area, empowering you with the knowledge you need to know when to power down and save.
Each week, you'll earn points that can be redeemed for rewards like gift cards and fun prizes, and the best part is OhmConnect will sell the energy you save back to the grid, sharing those profits with YOU! It's a win-win! Ready to become a member? Click here to learn more.