In many cases, the full amount of the rebates only go to households making less than 80% of their Area Median Income (AMI)—but that means a lot of families that definitely consider themselves middle class. One example offered by Rewiring America is a family of four in Cleveland, Ohio, that’s considered low-income, falling just below 80% of AMI with a $128,000 annual income. That family would get up to $14,000 of electrification costs covered. Households between 80% and 150% of their AMI are considered moderate income and will still get rebates, but in lower amounts.
High-income households won’t get rebates, but they will be eligible for tax credits available to low- and moderate-income households as well. Tax credits on many clean energy investments have increased. Solar, geothermal heat pumps, wind turbines, and fuel cells already had a 30% tax credit. Now they have a lot of company.
- Battery storage is now eligible for a 30% tax credit.
- The tax credit on insulation materials has gone from 10% to 30%.
- Heat pumps, heat pump water heaters, and biomass stoves are now eligible for a 30% tax credit up to $2,000.
- Efficient air conditioners, heating equipment, and water heating equipment; electric panel upgrades; and windows are all eligible for 30% tax credits up to $600. In each of those cases it’s an increase over what was previously available.
Another reason to be planning ahead is that those $2,000 or $600 limits are annual. You can get up to that limit in 2023 and then again in 2024.
While most of the provisions here are for homeowners, renters can take advantage of some of them by investing in portable devices they can move from rental to rental if necessary. That includes window-unit heat pumps, induction cooktops or stoves, and more. In a world in which landlords are halfway on the ball about these incentives, renters should also benefit from rental housing getting energy upgrades and new weatherization. That’s a bigger question mark, though.
Again, check out the calculator to find out what programs are available to you, with information on timelines. If you’re eligible for rebates, you’ll have to wait for your state to figure things out. If you’re only looking at tax credits, you can get moving now ahead of demand—though there’s a chance that if you wait, your state might sweeten the pot on those credits.
We always say that individual consumer decisions are not the way to make big change, that policy change is necessary. This is both at the same time (and the IRA includes separate incentives for developers, commercial buildings, and manufacturers), and the potential for reducing emissions is enormous. “Together, these programs will reduce U.S. carbon pollution 40 percent below 2005 levels by 2030, getting us four-fifths of the way to President Biden’s aggressive climate goal,” Rewiring America noted of the IRA’s energy provisions. This is a BFD, and every one of us should be looking into how we can take advantage.
