This may be a good year for some energy efficiency upgrade home remodeling! The Inflation Reduction Act has created energy efficiency rebates for those with moderate or lower income, and tax credits for those above median incomes for all kinds of home upgrades. For those whose income is 80% or less than the area median income (AMI), the rebates will cover 100% of the total cost for material and labor of qualifying projects. Households with income over 80% of the area median income (up to 150% of AMI) can use the rebates to cover 50% of the equipment and installation costs.
Beginning in January 2023, households bringing in more than 150% of the of the AMI instead of qualifying for point-of-sale rebates, Energy Efficient Home Improvement Federal Tax Credits can be used. This credit will be worth 30% of the total eligible projects up to $1,200 per year (or $2000 per year for heat pump water heaters and heat pump space heaters). Currently projects may be spread out to claim the tax credit in multiple years. Solar panel tax credit has been raised to 30% for the next 10 years, up from 26% previously.
Energy Efficiency Annual Tax Credits:
There is a new program called HOMES (Home Owner Managing Energy Savings) for states to provide rebates — up to $8,000 for low-to-moderate-income households; and $4,000 for everyone else — based on how much total energy savings has been achieved from a retrofit. This can be applied for other energy saving products that are not specifically listed in the federal program, such as hydronic water radiant in-floor heat system, insulation, air sealing ventilation, and the like. There could be state or local incentives still available for upgrading efficiency in appliances and improving the building envelope (insulation, windows and exterior doors) as well. It may be best to consult a tax expert to find out all you are eligible for.
Happy Home Remodeling!
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