New tax law provides $14,000 for home upgrades
The Inflation Reduction Act offers up to $14,000 in rebates and credits for making your home more energy efficient. The programs are still a few months from starting; however, you may want to research any possible purchases that you might make. And you may want to contact a contractor to schedule any work you want to do.
Rebates provide immediate benefits because they are applied when the item is purchased. Tax credits are received when you file your tax return.
Tax credits differ from rebates because buyers receive them when they file their taxes. Rebates are typically applied when the item is purchased. The HEEHRA rebates are slated to be available at the point of sale, such as when a consumer buys a heat pump through a home supply store.
There are two rebate programs.
The Homes Rebate Program provides over $4 billion to states to help people make their entire home more energy efficient. This program offers rebates based on the energy savings their upgrade will achieve. Homeowners who reduce their energy usage by at least 35% can get up to $4,000 in rebates. Low and middle-income households can get up to $8,000 in rebates.
The HOMES Rebate program includes new windows and solar panels that make your home more energy efficient. The HOMES Rebate should begin on August 16, 2022, when the Inflations Reduction Act became law. Details about how to claim retroactive rebates are not available at this time.
The High-Efficiency Electric Home Rebate Act (HEEHRA) provides rebates for low and middle-income families to electrify their homes. This includes installing heat pumps and electric clothes dryers. The maximum household rebate is $14,000. Two rebates can’t be claimed for the same upgrade. For instance, you can’t claim a Homes rebate and a HEEHRA rebate for the same upgrade.
The HEEHRA rebate is planned to be available at the point of sale, such as when a heat pump is purchased at a home supply store. The HEEHRA program offers rebates for qualified appliance purchases and other upgrades. The program can help offset part of the cost or even the total cost of heat pump installation. It provides rebates for heat pumps for up to $8,000. Rebates are also available for appliances like stoves and dryers.
The other items include:
$840 for electric stoves, cooktops, ranges, ovens
$8,000 for a heat pump
$1,750 for a heat pump water heater
$1,600 for insulation, air sealing, and ventilation
$2,500 for electric wiring
$4,000 for an electric load service center upgrade
You may want to schedule an energy audit of your home to help you determine which upgrades will benefit you most.
More details regarding the rebates and credits will become available in a few months.
David Zubler is a tax accountant and Enrolled Agent in East Tennessee, providing tax strategies and representing clients before the IRS and has over 25 years of tax experience. He is the author of six tax books and has shared tax advice on national TV. He is the founder and president of Your Tax Care. The company provides business and tax education, including David’s one-minute tax tip radio recordings at YourTaxCare.com. David can be reached at (865) 363-3019 or contacted by email at firstname.lastname@example.org.