Environmental Resources for Residents
What does the Inflation Reduction Act (IRA) mean for homeowners?
The Environmental Awareness Committee has compiled the following information about the benefits of the new legislation and how it can help people save money on conservation and renewable energy upgrades. Detailed information is available at https://www.whitehouse.gov/cleanenergy/
Energy Efficient Home Improvement Credit
Beginning in 2023, a 30% credit will be provided for home improvement costs, including installing certain energy-efficient insulation, windows, doors, roofing, and similar energy-saving improvements in your home.
In addition, the former $500 lifetime limit will be replaced by a $1,200 annual limit on the credit amount. The credit can reach up to $2,000 for electric heat pumps.
If home projects are spread out over years, residents can claim the maximum credit each year. The annual limits for specific types of qualifying improvements will be:
- $150 for home energy audits;
- $250 for an exterior door ($500 total for all exterior doors);
- $600 for exterior windows and skylights; central air conditioners; electric panels and certain related equipment; natural gas, propane, or oil water heaters; natural gas, propane, or oil furnaces or hot water boilers; and
- $2,000 for electric or natural gas heat pump water heaters, electric or natural gas heat pumps, and biomass stoves and boilers.
Beginning in 2025, no credit will be allowed unless the manufacturer creates a product identification number for the item, and the person claiming the credit includes the number on his or her tax return.
The revised credit extends through 2032.
High-Efficiency Electric Home Rebate Program
The program will provide rebates to low- and middle-income families who purchase energy-efficient electric appliances. To qualify for a rebate, your family's total annual income must be less than 150% of the median income where you live.
There are limits based on annual income and each qualifying family is limited to no more than $14,000 in total rebates under the program. States will establish the qualifying program and funds will be available through September 30, 2031.
Residential Clean Energy Credit
The credit is worth 30% of the cost to install qualifying systems that use solar, wind, geothermal, biomass or fuel cell power to produce electricity, heat water, or regulate the temperature of a home. The credit for fuel cell equipment is $500 for each one-half kilowatt of capacity.
The 30% credit extends through 2032, then falls to 26% for 2033 and 22% for 2034. It expires after 2034.
Starting in 2023, the credit no longer applies to biomass furnaces and water heaters, but will apply to battery storage technology with a capacity of at least three kilowatt hours.
Alternative Fuel Refueling Property Credit
The credit is worth 30% of the costs of “qualified alternative vehicle refueling property” installed in the home, up to $1,000. The application period expires at the end of 2032.
For most homeowners, the “property” refers to equipment to recharge an electric vehicle. The credit also applies to the purchase of "bidirectional" charging equipment, which can charge the battery of an electric vehicle and allow the homeowner to discharge electricity from the battery back out to the electric grid.
New & Used Electric Vehicle (EV) Tax Credits
New: Some new EVs are eligible for a tax credit of up to $7,500. No credit is available for vans, sport utility vehicles, pickup trucks with MSRP exceeding $80,000, or any other vehicle with MSRP exceeding $55,000.
Used: Used EVs are eligible for a credit of $4,000 or 30% of the sales price, whichever is lesser, as long as the sale price does not exceed $25,000.
Commercial Electric Vehicle (EV) Tax Credits
Commercial EV credit may not be combined with other EV credits described above. Businesses are eligible for tax credits of up to 30% of the vehicle purchase price for vehicles that meet certain battery specifications and purchase price limits.