Homeownership comes with its share of expenses, especially when it comes to renovations. But what if you could save thousands of dollars on making your home more energy-efficient? A recent initiative by the federal government might make this a reality for many American homeowners. Here’s how you can take advantage of the new opportunities.
Federal Rebates for Energy-Efficient Upgrades
Thanks to a new $9 billion federal program, part of last summer’s Inflation Reduction Act, many Americans stand to save significantly on home renovations. The focus is on energy-efficient upgrades, and savings can range from a few hundred dollars for appliances to a whopping $8,000 for a heat pump or a reduction in home energy use by 35% or more.
The rebates are meant to support the conversion of homes to more energy-efficient technologies at a time when fluctuating temperatures and extreme weather conditions have escalated cooling, heating, and powering homes’ costs. They also help offset inflation’s impact on the cost of renovations.
How Much Can You Save?
The size of the rebates will differ depending on your household income and your state, as each state will administer the program separately. Here’s what you might expect:
- Low-Income Household: Could claim up to $22,250 for complete energy efficiency upgrades.
- Moderate-Income Household: Potentially $19,000 in incentives on a $32,000 project.
- Higher-Income Household: Could get $7,200 on a home performance retrofit.
The new rebate programs and enhanced tax credits will remain valid through 2032, providing plenty of time for homeowners to take advantage of these incentives.
Start with a Home-Energy Audit
One way to kickstart your energy efficiency journey is with a home-energy audit. This will be a requirement for the new rebate program, and the IRS has laid out specific guidelines to identify the most significant and cost-effective improvements.
The cost of an audit can be around $500, but homeowners can get a $150 tax credit, allowing you to plan in place for when the state rebates become available.
Spread Out Home Improvements to Boost Savings
You can make incremental upgrades to your home, as demonstrated by Cynthia Adams, a homeowner in Durango, Colo. She strategically utilized federal and state incentives to make her home fully electric, beginning with Energy Star-rated appliances and planning insulation, air sealing, and a new heat-pump system. Her total savings are likely to be around $5,000.
Use Apps to Help Crunch the Numbers
The complexity of green incentives has given rise to free apps like Pearl Certification’s Green Door app and Rewiring America’s Inflation Reduction Act calculator. These tools can assist homeowners in navigating the maze of rebates, credits, and qualified contractors.
Claiming the Energy-Efficient Home-Improvement Tax Credit
Under revamped tax credits, homeowners can receive up to $1,200 for insulation and other items, and up to $2,000 for a heat pump. It’s an annual credit, so you can claim it for various improvements in different years.
Adding Value to Your House for Resale
Energy-efficient renovations not only save money on utility bills but also add value to your home. Realtor Craig Foley embarked on an electrification remodel for his Victorian house, adding new insulation, installing heat pumps, and planning solar panels and an EV charger. He received $10,700 in state rebates and expects his home to be more marketable when he decides to sell.
Conclusion
The new federal program offers a golden opportunity for homeowners to make energy-efficient upgrades to their homes without breaking the bank. With substantial savings in the form of rebates, tax credits, and utility offers, there has never been a better time to invest in green renovations. By staying informed and planning wisely, homeowners can make improvements that not only reduce their carbon footprint but also add real value to their property. Consult with your local energy provider or a qualified contractor to explore how these new tax rules can save you thousands on home renovations.
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