Get a Double Shot of Savings by Going Green
What if you could get some cash back today for making climate-friendly home upgrades that will also save you money in the future? Now is your chance for that double shot of savings.
2023 is an opportune time for making energy-saving home improvements, thanks to new rebates and expanded tax credits that offer major cash back and future savings potential.
Know Your Savings Potential
As part of the 2022 Inflation Reduction Act (IRA), certain families are eligible for up to $14,000 in total rebates for purchasing and installing energy-efficient electrical appliances and solar panels.
Even better, those families can save at least $350 a year on energy costs by making these investments. In addition, the IRA extends various tax credits for upgrading insulation, windows, doors, roofing, solar panels and a variety of appliances for even more potential home energy savings.
So, if you’ve been holding off on making energy-saving investments for your home, 2023 might be the best year to get started. Be sure to check your eligibility first, though, because IRA rebates have particular rules and are limited to families with a total annual income of less than 150% of the median income where they live. The tax credits have broader eligibility, so everyone has a shot at saving some money on energy-efficient improvements.
Ready, Set, Go
Here are ways to start saving around your home.
Cook up savings in the kitchen
That old gas stove that’s on its last legs – and perhaps a bit of a fire hazard – can now be an asset instead of a liability. Simply replace your old appliance with a new, qualified electric stove, cooktop, range, or oven and receive a rebate of up to $840 under the IRA’s High-Efficiency Electric Home Rebate Act.
Uncover value in your utility room
Significant savings are lurking in your utility room, where hefty IRA rebates can be found for various heating and electrical upgrades.
You can get up to $1,750 back for investing in a heat pump water heater or a rebate of up to $8,000 for installing a new heat pump for space heating or cooling.
Plus, you can get a maximum rebate of $2,500 for making various electric wiring improvements that support your appliance upgrades, as well as up to $4,000 for upgrading your home’s electrical panel.
Each of these rebates offers some immediate cash back potential, as well as the benefit of long-term energy savings for your household because of the upgrades.
Find spare change in the laundry room
Sure, you may find some change rattling around in your old clothes dryer, but you can find much more – up to $840 – when switching to an energy-efficient electric heat pump dryer and applying for an IRA rebate.
Such dryers offer significant energy savings potential by reusing heated air to dry clothes rather than releasing warm, humid air through an exterior vent. An ENERGY STAR®-certified heat pump dryer can reduce energy use by at least 28% compared to a standard dryer.
Seal in the savings
Under the IRA High-Efficiency Electric Home Rebate Act, rebates of up to $1,600 are also available for non-appliance upgrades, such as addressing your home’s insulation and air gaps. Sealing air leaks and adding insulation are sure ways to make your home more comfortable while also reducing furnace and air conditioner energy loads for lower utility bills.
The IRA also extended and expanded a popular tax credit for weatherizing your home.
You can get a 30% tax credit – up to an annual amount of $1,200 – for adding thermal insulation, replacing windows and doors, and performing energy audits.
The new $1,200 annual limit replaces the previous $500 lifetime limit. Since this credit is annual, consider spacing out your energy-efficiency improvements so you can claim the maximum credit each year.
Raise the roof on solar
Sunny skies are also ahead for homeowners who invest in solar energy systems because of a 30% tax credit available to offset equipment and installation costs. With the average cost of a solar-powered residential rooftop system around $19,000, the tax credit translates to $5,700 in direct savings.
Then, following installation, homeowners are expected to save about $300 in energy costs every year. This 30% credit runs through 2032 and is retroactive to the beginning of 2022. So, be sure to take your appropriate credit if you added solar panels last year.
Drive savings outside the home
You can also earn a hefty tax credit under the IRA for purchasing a new or used electric vehicle (EV), which will save you money on gasoline when you’re out and about.
Buying a new, eligible EV through 2032 will give you up to a $7,500 credit.
A used EV purchase will earn you up to a $4,000 credit (or 30% of the vehicle’s price, whichever is less).
Beware of your eligibility, though, because income requirements exist for the credit. In addition, an EV only qualifies if its final assembly took place in the United States.
Finally, to help charge your new EV at home, the IRA also resurrected the Alternative Fuel Refueling Property Credit, which had expired at the end of 2021. Extended through 2032, this money saver offers a 30% tax credit up to $1,000 for purchasing and installing a home EV charging station.
Maximize Your Savings
Going green today will give you much more back than just long-term energy savings, thanks to the wide variety of rebates and tax credits available under the 2022 IRA. You can also pocket significant cash back in the coming years by making a variety of home improvements. Just be sure to read all the fine print to confirm your eligibility because you must meet specific income requirements to qualify for savings.
It’s best to do your homework – and even consult your tax professional – ahead of your purchase, so you can maximize your savings potential.