The Inflation Reduction Act, introduced by President Biden, seeks to offer up to $14,000 in tax credits and rebates to promote energy-efficient home improvements. The U.S. government can reduce the cost of home upgrades by offering tax credits to people who buy more energy-efficient appliances and heating systems.
These kinds of incentives could help achieve the goal of lowering greenhouse-gas emissions by 20%. Two separate rebate programs will be available: the HOMES Rebate program and the High-Efficient Electric Home Rebate Act (HEEHRA).
Programs and Upgrades that will be Available!
The HOMES Rebate Program will provide more than $4 billion to states to help residents make their entire homes more energy efficient. The program offers rebates based on the energy savings their upgrades will achieve. The highest rebate is $8,000 for low- and middle-income households with at least a 35% reduction in their annual energy usage.
The HEEHRA program offers rebates for specific appliance purchases and other upgrades. One of the most notable rebates is for the purchase of heating pumps that provide air conditioning and heating, offering up to $8,000 in rebates.
The program also offers high-efficiency furnaces, insulation, and water heaters rebates. The rebate amounts vary depending on the product purchased and installed.
The High-Efficiency Electric Home Rebate Act (HEEHRA) provides a rebate of up to $10,000 to households that make certain energy efficiency improvements to their homes. A family can receive the maximum rebate of $14,000 only once, regardless of if they claim a rebate under the HOMES program or the High-Efficiency Electric Home Rebate Act (HEEHRA).
To qualify for the HEEHRA program, homeowners must meet specific energy-saving requirements for their homes or businesses. You must have an income below 150% of the area median income determined by the Department of Housing and Urban Development.
The HEEHRA program is one of the most popular incentives for homeowners to make energy upgrades. The program offers rebates for items such as heat pumps, insulation, air sealing and ventilation, electric wiring, and more.
The amount of money you can get back for each piece of equipment is as follows:
- $1,750 for a heat pump water heater
- $8,000 for a heat pump for space heating and cooling
- $840 for electric stoves, cooktops, ranges, ovens, and electric heat pump clothes dryers
- $4,000 for an electric load service center upgrade
- $1,600 for insulation, air sealing, and ventilation
- $2,500 for electric wiring
How Homeowners and Businesses Can Get Prepared
Homeowners can take two steps now to prepare for the tax credit. First, schedule an energy audit of your home, which can offer guidance on how to make your home more efficient. This is a great first step because you can gauge how efficient your home is now and see all the areas you have for improvement.
Second, start talking with contractors to line them up for projects when the rebates and tax credits become available. You will want to make sure you are in the queue for a contractor to get the necessary upgrade. We are seeing many supply chain issues in all different industries, so getting in sooner rather than later with a contractor is a smart idea.
As a business owner, you can use the new inflation law rebates in your marketing efforts. You can do so in a few ways that will offer the ultimate benefit to both your customers and your business:
- Advertise the Rebates: Make sure your customers are aware that if they install a new piece of equipment that meets all requirements, they are entitled to a rebate
- Offer an Additional Discount: Think about offering a percentage or dollar amount off equipment that is eligible for a rebate, giving more incentive for a customer to say yes to the replacement
For more information you can learn more about the new inflation law from this CBS article: Biden's inflation law offers up to $14,000 for home upgrades. Here's how to qualify.