The Inflation Reduction Act, which President Biden approved in August 2022, provides $400 billion to support clean energy and address climate change. Of that amount, $8.8 billion is for home energy rebates.
The Department of Energy expects some states to begin making rebates available in 2024. DOE estimates these rebates will save households up to $1 billion annually on energy bills.
The rebates fall under two categories: Home efficiency rebates and home electrification and appliance rebates. Here’s how each one will work.
Home efficiency rebates
Any renovation you’ve done since August 16, 2022 that reduced your energy use by 35% or more—including solar panels, insulation, heating, and windows, just to name a few—qualifies for a Home Efficiency Rebate of $4,000. That amount is doubled to $8,000 for low and middle income households. While the funds many not yet be available in your state, any renovations in this category you do before 2031 can qualify for this rebate and you will be able to claim it retroactively.
Home Electrification and Appliance Rebates
The goal of this program is to encourage homeowners to replace gas power with electric power.
For example, low and middle income households could get a rebate of $8,000 for adding an electric heat pump (which both heats and cools and can cut electricity use in half) and $840 for replacing electric cooktops and ovens with electric. Other upgrades that will qualify include a $1,750 discount for an electric heat pump water heater, $2,500 for electric wiring, and a $1,600 rebate for insulation, air sealing, and ventilation.
If you qualify, you could collect a total of up to $14,000.
Electrification and appliance rebates are taken at the point of sale, so you unfortunately won’t be able to retroactively redeem rebates from work already performed. But if you know you want to get work done, it might be a good idea to get on your servicer’s calendar now if they are booked out for months—just make sure the program is up and running in your state before you start the job.
Weatherization Assistance Program
The Weatherization Assistance Program began in 1976, and might be a way to reduce the cost of energy-saving upgrades for your home. The program provides weatherization services that reduce energy costs for approximately 35,000 homes every year using Department of Energy funds. The DOE says these improvements and upgrades save households an average $372 or more every year.
When will rebates be available?
States are responsible for applying for and running the rebate programs. The Department of Energy tracks where states stand with their applications, and estimates that some rebates will be available in 2024 (New York is the only state currently up and running), and programs in the majority of states should be available in 2025.
If your home urgently needs upgrades and you can’t wait until these programs are live in your state, there are existing state, local, utility, and federal programs that could help. Learn more about some of them here. You could also qualify for tax credits—learn more about home energy tax credits here.
If you know you need upgrades but aren’t sure where to start, you might consider consulting a professional home energy assessor to perform an audit. The Department of Energy has some tips on how to find a good assessor.
Home improvement rebates will soon be a great way to save money on making upgrades that will save you money on utility bills, increase the value of your home, and contribute to environmental sustainability. And in the meantime, you may be able to take advantage of tax credits and other government programs to save money while making your home more energy efficient.
Sources: Department of Energy, LIfehacker, IRS
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