Although it is called the Inflation Reduction Act (IRA), for many homeowners the opportunity to save money - by making their home more energy-efficient - trumps a gradual easing of inflation 10 years from now.
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On Aug. 7, Vice President Kamala Harris cast the tie-breaking vote as Senate Democrats passed the $430 billion Inflation Reduction Act - a climate, tax and healthcare bill that includes provisions to raise corporate taxes, lower prescription drug costs and reduce the federal deficit. The bill is due to be passed by the House on Friday.
Of particular importance to homeowners, the act will allocate approximately $370 billion for energy and climate programs and provide Americans ample opportunities to save money through rebates and tax credits.
According to MarketWatch, under the Inflation Reduction Act, $9 billion has been allocated to total energy rebates. Homeowners can receive rebates for qualified electrification projects - including up to $1,750 for converting to a heat pump water heater, up to $8,000 for a heat pump HVAC system and $840 for electric load service panels and electric appliances, such as dryers and stoves.
Rebates are also available to homeowners that will need to upgrade electrical panels (up to $4,000 rebate), insulate and seal their house (up to $1,600 rebate) and repair wiring (up to $2,500 rebate).
Available until Sept. 31, 2031, the High-Efficiency Electric Home Rebate Program (HEEHRA) is providing the rebates and will be administered by each state. The $4.28 billion program has a maximum rebate total of $14,000 per household. To qualify for these rebates, a household income must not exceed 150% of the area median income as calculated by the Department of Housing and Urban Development, according to Accounting Today.
For those who do not qualify for these rebates, the Inflation Reduction Act will grant tax credits for a heat pump installation (up to $2,000) and other energy-saving installations, like an induction stove or new windows or doors (up to $1,200 a year).
HEEHRA covers homeowners switching to solar, too. Those who install residential solar panels or solar battery systems (with at least 3 kilowatt-hours of capacity) will qualify for a 30% tax credit for installations until Dec. 31, 2034. This credit dips to 26% for installations after Dec. 31, 2032, and before Jan. 1, 2034.
The Inflation Reduction Act will be voted on in the House on Aug. 12, but several states are pursuing similar legislation.
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Noting Massachusetts' buy-in on rooftop solar, Safak Yucel, assistant professor of operations management at Georgetown University, said: "A lot of state governments, a lot of cities, they offer quite lucrative deals. I think as consumers look forward, they are more likely to see even broader involvement from state governments," per MarketWatch.
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This article originally appeared on GOBankingRates.com: Inflation Reduction Act Offers Home Tax Credits, Rebates to Upgrade Electric and Solar Infrastructure