The landmark Inflation Reduction Act makes $8.8 billion available for home energy efficiency and electrification projects. The Home Energy Rebate Programs in the IRA include Home Efficiency Rebates and Home Electrification and Appliance Rebates. Home efficiency rebates will include improvements like air sealing and insulating. Home electrification and appliance rebates will include improvements like installing heat pumps and electric appliances in place of fossil fuel units.
In addition to cutting indoor pollution and greenhouse gas emissions, the U.S. Department of Energy (DOE) estimates these rebates will support over 50,000 U.S. jobs while saving homeowners and renters up to $1 billion on their energy bills yearly.
If you’re interested in participating (and we recommend you do!), you’ll need to work with your state to get your share of IRA rebate money. The Office of State and Community Energy Programs (SCEP) is tasked with deploying federal grant money to each state and territory. You can use this page to check the status of rebates for your state.
As of early October, these programs are not yet fully operational, as states and territories are required to apply for federal grant money and develop their rebate programs. As the FAQ for the program states, “States and Indian tribes are responsible for designing and administering their own home energy rebates programs that will make the rebates accessible to households.” As a homeowner, you will eventually be able to access rebate money through your state or tribal government, and they’re estimating that to be implemented in 2024 for most places. You can check out the Home Energy Rebates FAQ for more information specific to your location.
Don’t worry; this doesn’t mean there is no money available today. In fact, you can check your state resources for energy efficiency programs at the DSIRE database. Simply enter your zip code and see state and local incentives such as grants, rebates, loan programs, and personal tax credits.
Your local utility may also offer programs that help ratepayers with energy efficiency improvements. That helps everyone when there is less overall demand for electricity and less pressure to build more electricity generation—especially when that generation would be more fossil-fuel power plants.
You can still get started now, though! One thing you can do before IRA rebate money is available is schedule and complete a home performance audit, sometimes called a home energy audit. Because of how the IRA is written, you can get this done in 2023 and take a tax credit against the cost of up to $150.
Why do you need a home performance audit? It’s crucial that you establish a baseline with some actual data before you go off on a frenzy of home energy-efficiency improvements. The best way to do that is with a home performance audit conducted by a professional auditor. These folks have specialized training in analyzing your home’s energy performance and utility bills and recommending ways to improve it. They also have a lot of handy tools and gadgets, such as drones and infrared cameras.
The Internal Revenue Service (IRS) recently published an update to clarify some points for these audits: How to Ensure Your Home Energy Audit Qualifies for A $150 Tax Credit. You’ll find specific information that you and your assessor must follow so that you’ll qualify for the tax credit:
A couple of other points are worth mentioning, as well. You’ll need to contract with a certified home energy auditor in order to take the tax credit; you can’t do the audit yourself. Your auditor must be certified by one of the Qualified Certification Programs at the time of the audit or under the supervision of a Qualified Home Energy Auditor.
You’ll get a report from the auditor, and it must include his/her name and relevant Employer Identification Number (EIN) or “other type of appropriate taxpayer identifying number.” If the auditor does not have an EIN, then the auditor must provide an attestation of his/her certification in a qualified program and the name of that program.
The following groups all employ certified professionals who can handle your home performance audit:
If you live in a metropolitan area, you’ll probably have many choices. If you live in a rural area, though, you might have to search a bit more. Here are some more resources:
After your home performance audit, you’ll have a report that gives you a wealth of actionable information to improve your home’s efficiency. Your assessor can also advise you on where to start. The following is a very common order of operations.
After The biggest bang for the buck is usually air sealing. It's also fast, fairly inexpensive, and typically pretty easy to do. Keeping your warm or cool air in the house - the air you've paid money to heat or cool - is easier when you've minimized the gaps where it's been escaping. Air sealing involves tasks like installing new weatherstripping around doors and windows. You might need to caulk any gaps that you see in the building envelope, which is the outer structure of the home. Your assessor will be able to show you where the air has been leaking in and our and wasting your money.
After air sealing, many homes can use more insulation, especially in the attic. If fiberglass insulation works in your situation, you’ll find that it’s not very costly, and it goes into place quickly. But working with it is not pleasant, so wear a mask and long sleeves at all times. Or hire a professional to make sure it’s done correctly if you’re not confident. The whole point is to fix it once and call it “done for good!” Other types of insulation are best left to professionals or seriously skilled do-it-yourself folks.
For a big bump in cost over air sealing and insulation, you can enjoy new energy-efficient doors and windows. If you’re skilled at home repair, you can do this yourself. If not, though, hiring a pro is a good idea. You’ll most likely spend a few thousand dollars to over $10,000, depending on the size of your home and whether or not you’re replacing all the units.
At this point in early October 2023, IRA rebates are in a sort of limbo as states get their programs rolling. You can tackle some home improvements with tax credits now, however.
Here’s the information from the IRS website:
“Taxpayers that make qualified energy-efficient improvements to their home after Jan. 1, 2023, may qualify for a tax credit up to $3,200 for the tax year the improvements are made.
As part of the Inflation Reduction Act, beginning Jan. 1, 2023, the credit equals 30% of certain qualified expenses:
The maximum credit that can be claimed each year is:
This means you can get credit for up to $1,200 per year for “energy property costs,” which are likely air sealing and insulation. For doors and windows, you can get tax credits of $500 for your new doors and $600 for your new windows if you need any.
The first step, though, is working with an expert to determine what your home really needs to be more energy efficient. So now is the time to get your home energy audit, good luck!
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