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What is the Inflation Reduction Act?
And what does it mean for you?
The Inflation Reduction Act is the largest clean energy investment America has ever made, with strategic incentives to make the transition to clean energy and a decarbonized life easy and financially smart. Its home energy offerings include upfront discounts, tax credits and low-cost financing that together provide a substantial pot of money for every household to electrify the machines they rely on — the cars they drive, how they heat the air and water in their homes, cook their food, dry their clothes and get their power — regardless of income level.
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How Can the Inflation Reduction Act (IRA) Improve My Home?
The Inflation Reduction Act will help Americans in every zip code in the country reduce their energy bills. The IRA contains key measures that will help households electrify their vehicles and heating systems and convert to renewable energy, including both tax credits and direct rebates that offset these technologies’ upfront costs. If a household installs a modern electric heat pump to replace their furnace, a heat pump for water heating, and converts to an electric vehicle and rooftop solar, they will save $1,800 per year on energy bills. Helping American households access these savings is not only critical to relieving inflation costs, but also to providing stability for the future, as these electric technologies have predictable operating costs.
Do I need to spend a lot to get these incentives?
in many cases, no! The IRA's incentives are designed to increase access to clean technology. For households with lower incomes, 100 percent of appliance and installation costs are discounted at purchase, meaning you could install efficient electric appliances at no cost, with no spending.Moderate -income households do have to spend in order to access savings, but up to 50 percent of appliance and installation costs can be covered through up front discounts, and you can use tax credit to cover some of the remaining gap. In most cases, these families will have to spend money either way because they're replacing a failed or failing machine - the IRA just makes the electric version the most affordable choice.Highest income households are not eligible for upfront discounts, so they will have to pay full price for appliances and installation - but tax credits on the back end could recoup around 30 percent of their costs.Everyone will likely see lower energy costs going forward.
Do the rebates and tax credits cover installation costs as well as purchase costs?
Yes!
When can I access the IRA's incentives?
The incentives are available now. The tax credits marked "2023" will be available on January 1, 2023. Unfortunately we don't know exactly when the up-front discounts marked "2023" will be available, because it will depend on how each state rolls out its incentive program. Our best guess is that those up-front discounts will be available by the middle-to-end of the year.
Can I benefit from other electrification incentives in addition to what's in the IRA?
Probably! It's up to your state, local government, and utility to decide if you're allowed to stack their incentives on top of the IRA's rebates and tax credit, but we think most of them will allow it.
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