Homeowners in the US are set to receive a substantial bounty from the Federal Government, as part of the much touted $1.5 trillion Inflation Reduction Act.
The landmark federal law that was signed into effect by the US President early this year, has nearly $400 billion earmarked for various energy and climate change-related initiatives, with the aim of cutting greenhouse gas emissions to 40% below 2005 levels, by the year 2030. Homeowners are set to play a critical role in this regard, as evidenced by the revamped energy credit and rebates system.
While this property tax credit has existed since 2005, it expired in 2017, and has since been revived under the 2022 bill, with various modifications and expansions. If you have any energy efficient home, or would like to get on the green bandwagon now, this guide will help you ascertain whether you can qualify for the Inflation Reduction Act rebate.
Residential Clean Energy Credit
The earlier Residential Energy Efficient Property Credit has now been replaced by the Residential Clean Energy Credit, with the scheme now extended past 2024, all the way through 2034. Under this, homeowners can acquire credits to the tune of 30% of the cost of installing qualifying alternative energy systems such as solar, wind, geothermal, biomass, or fuel cells.
Under the revised bill, the scheme has withdrawn support for biomass furnaces and water heaters, while extending fresh support towards battery storage technologies.
The Energy Efficient Home Improvement Credit
The Nonbusiness Energy Property Credit has been revived and revamped for 2023 as the Energy Efficient Home Improvement Credit.
Under this new system, homeowners can receive tax credits to the tune of 30% of the cost incurred on energy efficiency improvement costs, residential energy property expenditures even if the applicant does not own the home, and the cost of the house energy audit.
The $500 lifetime limit of this scheme has now been lifted, in-lieu of an annual limit of $1,200, and is restricted to only particular types of properties.
Alternative Fuel Refueling Property Credit
With electric vehicles all the rage, the expensive installations and infrastructure required to recharge at home has long been a pain point. Homeowners can now receive a 30% rebate on the cost of installing a qualified alternative fuel vehicle recharging property, up to $1,000.
The bill further specifies that starting in 2023, the rebates only apply to bidirectional charging equipment, in which the battery can be used for energy storage, and be discharged back out to the larger grid.
High-Efficiency Electric Home Rebates
The crowning jewel of the Inflation Reduction Act is the rebates offered to lower and middle-income households as part of the High-Efficiency Electric Home Rebates.
With this, consumers can receive substantial one-time rebates on buying energy efficient appliances, ranging from $840 for stoves, cooktops, and ovens, to $8,000 for a heat pump for heating and cooling purposes.
The rebates cannot exceed beyond 50% of the cost, and the family’s annual income must be less than 150% of the median household income in the area where they live.
There is a lot that’s happening in the green energy space, and for homeowners with a conscious craving, the time is ripe to take action and work towards lowering their own carbon footprints.
With rebates, credits, and allowances as generous as this, we are likely to see a steady streak of new innovations in energy efficiency and renewables, with the gloves officially coming-off in this fight against climate change.