The Inflation Reduction Act is a plan with an unprecedented scope designed to tackle a number of issues, ranging from rising healthcare costs to stagnant salaries. This extensive project will invest a total of $437 billion and includes measures that will promote electrification and clean energy projects.
For homeowners, some of these measures will translate into savings and opportunities to upgrade their home or vehicle.
The Inflation Reduction Act extends an existing $7,500 credit toward the purchase of a new EV. Under this new program, buyers will benefit from a rebate at the point of sale rather than claiming a tax credit at the end of the year.
There are a few limitations to keep in mind:
Overall, there are around 30 new EV models that currently qualify for this credit. Automakers are asking the government to rethink the sales cap limitation, which means more EVs might become eligible in the future.
The IRA also introduces a separate credit for the purchase of used EVs. If you purchase a vehicle that is less than two years old, you could get a rebate of up to $4,000 or 30% of the price of the EV. Note that you can’t spend more than $25,000 on the vehicle to qualify. Your AGI also has to be under $75,000 for single filers, $150,000 for couples, or $112,500 if you file as head of household.
The Inflation Reduction Act introduces and extends different credits designed to offset the cost of home improvement or electrification projects.
The nonbusiness energy property credit allows you to claim 30% of the value of an energy-efficient project, such as installing a skylight, improving insulation in your home, or upgrading your doors and windows. There is a limit of $1,200 for these projects and a limit of $2,000 for additional projects such as installing a heat pump, a heat pump water heater, or a biomass stove or boiler.
Homeowners can qualify for a 30% tax credit for installing solar panels, small wind turbines, and other clean energy projects. The White House estimates that 7.5 million families will be able to install solar panels thanks to this program.
Note that this credit is retroactive for 2022. If you invested in a project that went active this year, you can still qualify.
The IRA reactivates the Alternative Fuel Refueling Property Tax Credit, a program that previously expired in 2021. Homeowners can qualify for a tax credit of 30% on an EV charger installation, up to $1,000.
The Inflation Reduction Act introduces two new programs designed to help homeowners reduce their energy consumption through holistic energy-saving projects:
However, these rebate programs come with strict income requirements. You won’t qualify unless you earn 80% or less of the median income in your area.
The federal government is funding these two programs, but states will distribute the funds. The Department of Energy will likely issue further regulations for these programs, and your state will have to apply for these rebates to become available in your area.
The IRA contains several provisions that will address infrastructure challenges, tackle climate change, and reduce high energy costs. With a $369 billion investment in energy security and climate change, this plan aims to create a net-zero economy by 2050.
Consumers will likely see reduced energy prices thanks to the following measures:
Now is the right time to start thinking about home upgrades and electrification projects, with the Inflation Reduction Act introducing new rebates and tax credits. Take advantage of these financial incentives by utilizing the support available through Qmerit in hiring electricians you can depend on to produce safe, top-quality work.
Qmerit is Electrification Made Easy™ with an unsurpassed network of licensed professionals across North America ensuring the highest quality of electrification installation services. We can connect you with a local, certified electrician, capable of discussing your unique needs and recommending the best solution for your home. Contact us today to learn more.