Inflation Reduction Act: How to Take Advantage in 2023
January 25, 2023
For Northern California homeowners looking to make upgrades to their home this year, we’ve got great news: the Inflation Reduction Act (IRA) makes it more affordable than ever. The Inflation Reduction Act, which was passed in August of 2022, includes significant savings for homeowners on energy-efficient services via new or expanded tax credits and rebates. Many of those incentives are now available to homeowners or slated to become available soon.
Today, we’re exploring how homeowners can take advantage of these savings on home performance upgrades in 2023 (and beyond!). Ready to learn more about these savings and how the local experts at Brower Mechanical can help? Let’s dive in.
The Inflation Reduction Act Energy Efficiency Tax Credit
When the IRA was signed into law in 2022, it included $370 billion in funds specifically aimed at improving the environment. Some of the most readily-available incentives were tax credits for homeowners and businesses to make energy-efficient upgrades (and thus, reduce their carbon footprint).
One such credit is the 25C tax credit, aka the Energy Efficiency Home Improvement Credit. Homeowners can use it for upgraded HVAC systems, new insulation, home energy audits, and more.
So, what’s new with this tax credit in 2023? This year, this credit increased from 10% to 30% and the lifetime cap of $500 has been replaced with annual caps as high as $2,000, depending on the service. Qualifying upgrades include:
- - Energy audits ($150 max)
- - Energy-efficient HVAC systems (air conditioning, furnaces, boilers, $600 max)
- - Electrical panel upgrades ($600 max)
- - Insulation and air sealing ($1,200 max)
- - Heat pumps, heat pump hot water heaters, and mini-splits ($2,000 max)
The Federal Solar Tax Credit
The Energy Efficiency Home Improvement Credit isn’t the only tax credit improved by the IRA. The Solar Investment Tax Credit (or ITC) is a well known credit that helps homeowners save thousands on solar services including solar panel installation and solar batteries. Thanks to the IRA, the solar ITC is now worth 30% of your total solar costs—from materials to installation—with no cap!
Inflation Reduction Act Rebates
The IRA also created two new rebate programs homeowners can use to save thousands on home electrification and home performance upgrades: the HOMES (Home Owner Managing Energy Savings) Rebate Program and the High-Efficiency Electric Home Rebate Program. Rebate amounts vary, but go as high as $14,000 for income-qualified households and up to $4,000 for everyone, regardless of income!
Though these rebates are not yet available, funds are expected to be delivered to states in the spring of 2023 and will be managed and distributed by the California Department of Energy. Both rebate programs incentivize households to make energy-efficient upgrades for heating and cooling, insulation, weatherization & air sealing, home electrification, and more!
Stay tuned for more details as states receive their funding and rebates & incentives become available to homeowners eligible for income-qualified rebates.
Home Performance and Electrification Upgrades with Brower Mechanical
For Californians in and around the Sacramento area, Brower has you covered for your home electrification and energy-efficiency needs. With increased tax credits available through the IRA in 2023 as well as rebates slated to receive funding in the (hopefully near!) future, the time has never been better to consider investing in upgrades for your home.
With over 40 years experience and expertise in helping homeowners maximize their savings through rebates and financing, Brower is your go-to local expert. We know that energy efficiency plays a critical role in the future of energy here in Northern California, and are excited to help you make changes that save money and improve your home performance and indoor comfort.
