October 3, 2022

Inflation Reduction Act can put 'green' in your pockets

Signed into law Aug. 16, The Inflation Reduction Act (IRA) could mean big savings on big-ticket environmental upgrades for American homeowners, as well as lower annual energy costs.

The bill features $1.6 billion in potential tax savings and more than $80 billion in energy rebates - up to $14,000 per household – for energy-efficient appliances and upgrades, including HVAC systems, heat pumps and new insulation.

The bill also refreshes an ongoing credit for installing solar panels – and raises the maximum rebate to 30% of the total cost. Before, the credit was at 26% and set to decrease to 22% in 2023 before disappearing altogether.

A similar 30% credit - up to a max of $2,000 - can defray the expenses of certain energy-efficiency projects like upgraded windows and doors, as well as natural-gas water heaters.

Green technology could save a family as much as $1,840 a year on energy costs, according to estimates from the nonprofit Rewiring America.

To help “drive” these programs, the IRA also expanded tax credits up to $7,500 for new electric vehicles and introduces a credit of up to $4,000 for used EVs.

The breaks extend to the workplace. Companies and manufacturers can receive tax incentives for making the transition to green energy sources and/or curbing emissions or increasing domestic energy production.

With real estate anticipated to consume around 40% of global energy annually, green impact has become a more urgent issue in the last several decades. Beyond saving money, cleaner energy and efficiency should help avoid the worst of climate change.

Home insurers are seeing a steady rise in claims due to climate-related natural disasters, with losses outweighing premiums in four of the last five years.

An analysis from Princeton University projects the Act could help reduce American carbon emissions by 42% over the next 30 years.

Most of these programs will be administered by the states, so the specifics of applying for and receiving rebates may vary. But no matter where you live - the choice go greener at home can mean more “green” in your wallet.