Inflation Reduction Act Incentives

Improving your home’s energy efficiency with HVAC and insulation upgrades can help lower your utility bills and increase your comfort—but that doesn’t mean they come without a cost. Now, thanks to the Inflation Reduction Act (IRA), these home improvements are more affordable than ever. Within the IRA are several tax credits and rebates aimed to incentivize clean energy and electrification to homeowners throughout the country.

Unfortunately, this tax credit will be eliminated at the end of 2025, and you’ll need to act fast if you want to take advantage. Wise Home Energy can help ensure that your work qualifies. Reach out today to see how much you could save with the insulation tax credit and other available incentives and rebates.

What is the Inflation Reduction Act?

Officially made into law in August 2022, the IRA has allotted $370 billion to help reduce greenhouse gas emissions and promote clean energy. This is the largest investment in climate change by the federal government in history and it’s designed to aid the country’s goal of drastically decreasing carbon emissions by 2030.

Warning: The Insulation Tax Credit Expires at the End of 2025!

Although the insulation tax credit was originally intended to run through 2032, a new law passed this year eliminates the tax credit early. This means that you only have a few months left to claim your savings! Your insulation upgrades must be completed on or before December 31, 2025 in order to qualify, and our schedule is filling up fast. If you want to save money when you upgrade your home, reach out to Wise Home Energy today to book your appointment.

IRA Federal Tax Credits

The Inflation Reduction Act tax credits, formally referred to as the Energy Efficient Home Improvement Tax Credit, allows homeowners to reduce their federal tax liability by 30% of the cost of qualified home upgrades. These credits can be claimed year after year for separate services from now until 2032, however any unused balances do not roll over. There is an annual cap $3,200 for the IRA tax credit, which is broken up into two groups:

Claim Up to $2,000 Per Year in Heat Pump Tax Credits

This includes ducted or ductless mini split heat pumps and heat pump water heaters. The heat pump tax credit has a combined cap of $2,000, which means you cannot claim more than that amount in a single year for heat pump and heat pump water heater installation, regardless of how many heat pump systems you install. You could install a heat pump one year and a heat pump water heater the following year, and claim $2,000 in tax credits each year.

Claim Up to $1,200 Per Year in Insulation Tax Credits & Energy-Efficient HVAC Tax Credits

• Insulation and air sealing tax credits have a combined cap of $1,200.
• High-efficiency HVAC tax credits include furnaces, air conditioners, and water heaters, which each have a $600 individual cap. All equipment must be ENERGY STAR certified to qualify.
• Home energy assessments are also included in this bracket, which qualify for up to $150 in federal tax credits.

To claim the Inflation Reduction Act federal tax credits, homeowners can fill out Form 5695 with their annual tax returns or talk with their tax professional. Wise Home Energy will give you an itemized receipt for your services, which is also required.

How to Claim Your Tax Credit

Claiming your tax credit for insulation and air sealing upgrades is straightforward:

1. Schedule Work Before 2026! This tax credit is ending early, and your upgrades need to be completed on or before December 31, 2025.
2. Verify Eligibility: Wise Home Energy will verify with you that the insulation work we’ve done for you meets the criteria for tax credit eligibility.
3. Keep Your Receipts: We will also provide you with an invoice breaking down the tax-credit-eligible portion of your work. You’ll need this when you or your accountant goes to file your taxes for this year.
4. File IRS Form 5695 or consult a Tax Professional:* When you file your taxes, remember your tax credit!

*At Wise Home Energy, we have a tax professional prepare our taxes, and recommend that you do, too. Our goal is to be as helpful as possible in ensuring you get your tax credit, but we’re experts in insulation, not taxes!

IRA Rebate Programs

The Inflation Reduction Act also introduced two rebate programs—however, they aren’t available just yet. Each state will need to apply for IRA rebate funding and distribute them to their residents through new or existing clean energy programs.

We are still awaiting details on New York’s plan for implementing these rebate programs, but our team will surely make an announcement as soon as we know when they will be available to homeowners in the Greater Rochester area.

Make the Wise Choice and Start Improving Your Home Today!

At Wise Home Energy, we don’t recommend waiting for the IRA rebates—or any incentive program for that matter—to go into effect before making home upgrades. There is no saying how long it will take for these rebate programs to be implemented and every day you wait is another day you’re missing out on more home comfort and lower utility bills.

The IRA incentives aren’t the only rebates and incentives available in the Rochester area either. Many local utility companies offer rebates for improving your home’s energy efficiency, while NYSERDA offers competitive financing options. The Wise Home Energy team can help you determine what upgrades are eligible for incentives to maximize your savings.

We’ve been helping homeowners throughout the Greater Rochester area with our comprehensive services since 2010. Our building science expertise and passion for energy efficiency has enabled us to complete:

• Over 3,000 home energy assessments
• 2,700+ insulation projects
• More than 1,000 right-sized HVAC installations
• 40+ whole home electrification projects

When it comes to home performance, make the Wise choice and reach out to our team today.