The Inflation Reduction Act of 2022 (IRA) was signed into law this past August, which is exciting news for Mainers who want to upgrade their home’s energy efficiency. The IRA offers generous incentives that make energy efficiency home improvements like insulation and air sealing, more affordable to homeowners. Improvements like these save energy, which means they can reduce your high energy bills and contribute to a cleaner environment at the same time.
There’s a lot in the Inflation Reduction Act and there are still details emerging about many of its programs. Today, we’re going to break down everything we know about Inflation Reduction Act rebates and incentives and how Maine homeowners can take advantage of them.
The Inflation Reduction Act of 2022: A Summary
The Inflation Reduction Act is a landmark federal law that was signed into United States law in August of 2022. The law directs billions of dollars in federal spending toward reducing carbon emissions and is the largest investment the United States has ever made in climate change. The funds will be delivered through a variety of avenues, including tax credits and rebate programs for consumers.
How Can the Inflation Reduction Act Save You Money?
Maine homeowners can save money on a variety of energy efficiency and clean energy projects by taking advantage of IRA energy efficiency and renewable energy incentives including:
The Solar Investment Tax Credit
The Energy Efficiency Home Improvement Tax Credit
The HOMES (Home Owner Managing Energy Savings) Rebate Program
The High-Efficiency Electric Home Rebate Program
The Solar Investment Tax Credit (ITC)
The ITC, also known as the federal solar tax credit or the IRA renewable energy tax credit, allows homeowners who install solar panels to reduce their federal tax liability by 30% of their installation costs. There is no cap on the solar tax credit and it can make renewable energy installation significantly more affordable for your home. The 30% solar tax credit is available from 2022 until 2032.
The Energy Efficiency Home Improvement Tax Credit
The Energy Efficiency Home Improvements Tax Credit is a revival of an old tax credit you might be familiar with—the Nonbusiness Energy Property Tax Credit. The new IRA energy efficiency credit has been increased from 10% to 30% (with a $1,200 annual cap on most services) and will be available from 2023 until 2032. Qualifying projects completed in 2022 are eligible for a retroactive credit but at its original 10% value.
Many energy efficient home upgrades qualify for the IRA energy efficiency tax credit, including:
Heat pumps
Heat pump water heaters
Energy efficient windows and doors
The HOMES (Home Owner Managing Energy Savings) Rebate Program
The HOMES rebate program offers rebates for energy efficiency upgrades with modeled energy savings of 20% or more. Qualifying upgrades include insulation, air sealing, HVAC upgrades, and more.
Projects with modeled energy savings of 20% or more qualify for a $2,000 rebate
Projects with modeled energy savings of 35% or more qualify for a $4,000 rebate
Rebate amounts are doubled for low and moderate-income households
These rebates cannot be combined with other federal grants or rebate programs.
The High-Efficiency Electric Home Rebate Program
The High-Efficiency Electric Home Rebate Program will provide energy efficiency rebates to low and moderate-income households. The program offers rebates for a variety of services, including a $1,600 rebate for insulation, air sealing, and ventilation. Additional rebates are available for heat pumps, energy efficient appliances, and electrical system upgrades. There is a $14,000 maximum rebate amount per household and the rebates cannot be combined with other federal grants or rebate programs.
How Do the Inflation Reduction Act Rebates Work?
The HOMES rebate program and the High-Efficiency Electric Home Rebate program will be implemented by individual states. Each state will receive funding from the federal government and its department of energy will be responsible for distributing the funds. Maine will receive a total of $71,664,970.
It will still be a while before this rebate program is available to homeowners—DOE expects funding to be available to the states by the spring of 2023 and to the public later that year. Funding is expected to go quickly and it will be important to act fast if you want to take advantage of these savings! We will be providing updates as more information on how to claim Inflation Reduction Act rebates becomes available.
We Can Help You Take Advantage of the Inflation Reduction Act Savings
The Inflation Reduction Act can help you cut energy costs in 2023 and beyond by making important energy-saving upgrades more affordable. Evergreen Home Performance can help you take advantage of these savings! We are a local insulation and energy efficiency company that has been helping Mainers improve their homes since 2006. We believe all homes should be safe, healthy, and comfortable, and we know we can improve our environment one house at a time.
If you have questions about the Inflation Reduction Act for energy efficiency upgrades, give us a call. We can help you maximize your savings with IRA incentives, Efficiency Maine rebates, and financing for home improvements.