In August 2022, President Biden signed the Inflation Reduction Act (IRA) into law, giving a major funding boost to help decarbonize residential buildings and fight climate change. There is quite a lot packed into this bill and it is a bit confusing, so this blog will attempt to unpack some of the pieces to make it more digestible.
So what is the IRA? It is a bill that has many economic stimulus packages, including tax rebates and incentives for residential decarbonization projects and funding for states to administer greenhouse gas reduction programs.
First let's discuss the tax incentives found in the IRA. The Residential Energy Efficiency Tax Credit gives a 30% tax credit for qualified energy efficiency projects with an annual maximum cap of $3200. Which means, you may want to stagger your efficiency projects over a couple of years to maximize your returns. There is also a 30% project cost tax credit with no limitation for solar, battery storage, and electrical panel upgrades.
Next are the rebate programs that have yet to take effect, but should be active by mid-to-late 2023.
1) High Efficiency Electric Homes Rebates (HEERA) will be point of sale, income-qualified rebates for residential electrification projects as follows; 50% of the project cost for those below 150% Area Median Income (AMI) or 100% project cost for those below 80% AMI. There is a $14,000 cap, but that's a lot of cash to help your electrification projects!
2) Whole Home Energy Efficiency Program (HOMES), these rebates are capped at 50% of the project cost or 80% if you are 80% AMI.
Still a little confused? Me too and I have been researching this for a while. Not to worry, there is a helpful IRA calculator created by our friends at Rewiring America that you can use to learn more. Put in your zip code, tax status, and income and the calculator will display the tax credits, incentives, and rebates you qualify for. Happy Decarbonization!