The Inflation Reduction Act of 2022 was designed to combat inflation, invest in domestic energy production and reduce carbon emissions 40% by 2023. In fact, $369 billion has been allocated for Energy Security and Climate Change programs over the next ten years.
Portions of this money can be received through energy tax credits for going green and taking measures to lower your carbon footprint. These benefits will run through 2032, and it's possible you could qualify for a whopping $10,000 in credits. More information can be found from the White House Clean Energy website.
There are several ways to earn the IRA's energy tax credits. Keep reading to learn more about each.
Buy Energy Star Appliances
By purchasing energy efficient appliances, you could save hundreds thanks to the inflation reduction act’s energy tax credits. Here are the products you can receive credits on, according to Energy Star.
Air Source Heat Pumps
Tax Credit Amount: $300
Central Air Conditioning
Tax Credit Amount: $300
Gas, propane or hot water boiler
Tax Credit Amount: $150
Gas, propane or oil furnaces and fans
Tax Credit Amount: $150
Gas, oil, propane water heater
Tax Credit Amount: $300
Electric Heat pump water heater
Tax Credit Amount: $300
Advanced main air circulating fan
Tax Credit Amount: $50
Energy Efficient Home Improvements
You can also save by investing in the following energy efficient home improvements.
Insulation: Includes typical insulation equipment including batts, rolls, blow-in fibers, rigid boards, expanding spray, and pour-in-place.
Tax Credit Amount: 10% of the cost, up to $500
Roofs: Energy Star certified metal and asphalt roofs that are designed to reduce heat gain through pigmented coatings or cooling granules are eligible.
Tax Credit Amount: 10% of the cost, up to $500
Windows, doors and skylights: Products must be Energy Star certified. You do not need to replace all windows/doors/skylights in your home to qualify.
Tax Credit Amount: 10% of the cost, up to $500 (windows are capped at $200)
Electric vehicles
If you buy a new electric car, you could be eligible to receive up to $7,500 if the vehicle was assembled in North America. However, credits will only be available to individuals making less than $150,000, single heads of households making less than $225,000 and married couples with a joint income of less than $300,000.
Owners of used electric vehicles can receive a tax credit of up to $4,000. The credit will only apply to cars less than $25,000. Credits are only eligible for individuals making $75,000 or less, $112,500 for single heads of households and $150,000 for married couples.
Renewable home energy systems
By installing the following home energy systems, you can receive a credit equal to 30% of the cost.
- Geothermal heat pumps
- Small wind turbines (residential)
- Solar energy systems (solar water heaters / solar panels)
- Fuel cells (residential fuel cell and microturbine system)
- Biomass fuel stoves
