Upgrading your home’s performance has never been easier with the Inflation Reduction Act (IRA) incentives. As the largest investment in climate change by the federal government in history, the IRA offers several federal tax credits that can make improving your home more affordable.
However, in order to claim these incentives for the 2023 tax year, all work must be completed by December 31st. Keep reading to learn more about the Inflation Reduction Act tax credits and how Wise Home Energy can help you save.
What’s Included in the IRA Tax Credits?
Homeowners can claim a federal tax credit that covers 30% of the cost of qualifying home upgrades through the Energy Efficient Home Improvement Tax Credit. This is a revamped tax credit that was made possible with the IRA and reduces your federal tax liability. However, if you don’t owe any taxes, the credit does not go toward a refund and cannot roll over to the following year.
There is a $3,200 annual cap on the IRA tax credits, which can be claimed year after year as you upgrade your home, from now until 2032. Qualifying home upgrades are broken into 2 groups:
Heat Pump Tax Credits Up to $2,000
This includes a heat pump, mini split heat pump, or heat pump water heater installation. The annual cap for heat pump tax credits is $2,000, meaning even if you install more than one heat pump in your home, you can only claim up to that amount per year. But, if you install a heat pump water heater this year and upgrade your HVAC system in 2024, you can claim the credit for both years.
Energy-Efficient HVAC & Insulation Tax Credits Up to $1,200
ENERGY STAR-certified furnaces and air conditioners also qualify for tax credits, though the maximum is $600 per unit. In the same group are home energy audits, insulation, and air sealing. The maximum tax credit for all of these services is $1,200, regardless of how many upgrades are made. Here is the breakdown of this tax credit group:
- Insulation & air sealing – $1,200 maximum
- Energy-efficient HVAC – $600 maximum each for furnaces and air conditioners
- Home energy audit – $150 maximum
Upgrade Now For the Shortest Payback Time
If you upgrade your home before the year ends, you’ll have a pretty short payback period with tax season coming up in April. But, if you decide to wait to improve your home’s insulation or HVAC system until sometime in 2024, you could end up having to wait up to a year or more to see your incentive come through. Acting now is the best way to get your incentive payback as soon as possible.
One of the best things about the IRA tax credits is that they can also be combined with other rebates and incentives. Currently in the Rochester area, homeowners are also eligible for:
- NYSERDA insulation and air sealing rebates up to $4,000
- National Grid rebates for furnaces, boilers, heat pumps, and heat pump water heaters
- RG&E and NYSEG rebates for furnaces and boilers
Professional Home Services in Rochester
At Wise Home Energy, we want to help you maximize your savings on home upgrades. Our qualified team of insulation and HVAC installers can not only help find the right home upgrades for your home, but will provide expert installation and honest service for every step of the process. Making these improvements to your home will bring several benefits, such as:
- Energy savings
- Improved indoor air quality
- More home comfort
- And more!