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.
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.
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, which can only be claimed for materials—not including labor.
- 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.
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.
Get started with a cleaner, greener home and schedule a Wise Home Assessment. Call 585-270-5836 or contact us online.
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