INFLATION REDUCTION ACT: When Will Benefits Become Available?
The new Inflation Reduction Act will offer a wealth of programs to help homeowners save energy on their homes and reduce carbon emissions. Many of the programs will not be available until the federal Department of Energy finishes developing guidance, and until state agencies including the Colorado Energy Office launch programs. The revised tax incentives begin on January 1. This is a good time to get familiar with some of the potential savings and to start planning your home improvements. Here are some of the major programs for homeowners:
Home Energy Performance Whole House Rebates (HOMES): This $4.3 billion program will be operated by state energy offices to provide rebates for retrofit packages based on reduced home energy use.
High-Efficiency Electric Home Rebate Program: This $4.3 billion program will also be run by state energy offices and will provide rebates to low and moderate income households to install heat pumps and other efficient electric equipment.
Energy Efficient Home Improvement Credit: This long-standing federal tax credit offers help for home energy improvements such as insulation, windows, heat pumps, and furnaces. Starting in 2023, IRA increases the credit to 30% of cost, with an annual cap of $1,200 and with smaller limits for most items but it allows up to $2,000 for a heat pump or a wood stove. (In 2022 the credit is under the old rules, with lower amounts and a lifetime cap of $500.) The credit is taken on tax returns.
Greenhouse Gas Reduction Fund: This is a $27 billion set of programs to be run by the Environmental Protection Agency (EPA). The programs will provide competitive grants to states, tribes, cities, and nonprofit organizations who in turn provide financial and technical assistance for projects to reduce or avoid GHG emissions and other forms of air pollution.
The American Council for an Energy Efficient Economy published an excellent policy brief with much more detail. Read it here
The U.S. Department of Treasury and the IRS are seeking opinions from the public about how to implement the climate and clean energy tax provisions. You can weigh in here
The Solar Energy Industries Association has a fact sheet on the solar energy provisions here
We'll provide updates on programs, rebates and incentives as they become available.