The Inflation Reduction Act is live!
Tax credits available under the August 2022 Inflation Reduction Act are now yours! There are no income limits to block the availability of these credits. If you incur tax liability in 2023, you may be eligible for some of these fantastic financial catalysts for energy efficiency action. And, these credits are not limited to just 2023! Unless something changes at a congressional level, these credits reset every year until 2032. This means that a bit of project planning will be to your benefit. By organizing your energy efficiency home improvement projects, you may be able to take $1,200 in tax credits for a number of years. You cannot carry over any unused credit but you can stagger your expenditures to enable the credits over multiple years.
The Inflation Reduction Act tax credits are like having your own ‘electric bank account’!Rewiring America
For example, you could upgrade your electrical panel this year to allow for the addition of a heat pump, grabbing the $600 panel credit and the 30% of cost (up to $2,000) heat pump credit. (Note: the 30 percent tax credit up to $600 for an electrical panel upgrade is only an option if the panel upgraded in conjunction with another upgrade, like a heat pump.) Next year, a bit of air sealing and insulation work will allow another $1,200 in tax credit. Maybe the following year you upgrade a door and a couple of windows, netting yet another $1,200 in credit. By working with the annual cap of $1,200, this credit can be applied to numerous cost-saving improvements, saving you thousands of dollars and lowering annual energy costs
Here are some great resources to get you thinking about your home improvements, energy efficiency, and IRA tax credits:
OUR FAVORITE! https://www.rewiringamerica.org/app/ira-calculator
Alaska Heat Smart’s IRA FAQ page
DOE: Making Our Homes More Efficient: Clean Energy Tax Credits for Consumers
Upfront Discounts and Energy Efficiency Rebates
These very generous financial incentives will not be available until later into 2023 or even sometime in 2024. These upfront cost discounts differ from tax credits in that your gross household may not exceed designated income caps. While we have not yet seen these final income caps, we assume that they will be similar to those that apply to the Alaska Heat Smart Clean Heat Incentive Program, though the upper limit of the IRA rebates will be a bit more generous.
Alaska Heat Smart is increasingly asked whether or not a homeowner should hold off on a heat pump installation or weatherization upgrades, and choose to hold out for the IRA rebates. This is a personal decision and there are many factors that come into play. How long do you want to wait to start your savings? How imminent is your boiler or furnace failure? Can you go another winter with the systems you currently have? Should you act now and combine existing benefit programs, taking advantage of the rebates one they become available?
If in doubt, be sure to take a look at our existing programs. It is possible to mix and match some of these, allowing you to act now. The combination of a heat pump incentive, a tax credit, and even a low interest heat pump loan can you have you saving in no time.