September 12, 2023

Rebates could upgrade nation’s home energy

Homeowners across the United States could soon see access to substantial rebates for making energy efficiency improvements.

Passed in 2022, the Inflation Reduction Act contains a significant component of climate-focused legislation. Its two main initiatives - the Home Efficiency Rebates program and the Home Electrification and Appliance Rebates program - provide rebates of up to $14,000 to stimulate the adoption of energy-efficient technologies and reduce household energy consumption.

Eligible projects include improvements like installing new insulation, heat pump upgrades and adoption of Energy Star appliances.

Though this is a federal program, states will administer the funds, and must apply for the grants through the U.S. Department of Energy. The application window opened July 27. The rebates are designed to be delivered at the point of sale – either by retailers or contractors, but the specific availability and implementation timeline will vary.

However, not all states are participating; Florida has indicated it will not apply for the allocated federal funds, potentially leaving its significant populace of homeowners without access to the rebates.

Some states may begin issuing funds toward the end of 2023, with the majority anticipated to do so in 2024. This gradual rollout allows state governments to design and implement effective programs tailored to local needs and circumstances.

One notable feature of the rebate program is its potential to "stack" with existing clean energy tax credits. If homeowners can leverage both rebates and tax credits it could open up opportunities for a wider range of homeowners, including low, middle, and high-income families.

Historically, such clean energy tax breaks have largely served only higher income households - who have more tax liability and therefore benefit more from tax credits, which are nonrefundable. But lower earners can pair the new rebates with existing tax credits.

A recent private analysis showed low earners may get more than $22,000 in potential support from the federal government by stacking the rebates and credits. Middle-income households can get up to about $19,000, and higher earners can get back around $7,200.

These categories are pegged to each area’s median income, as defined by the U.S. Department of Housing and Urban Development (HUD). See the HUD website to see limits in your area. Home Electrification and Appliance rebates are available only to low- and middle-income consumers.

As homeowners across the country explore these rebate opportunities, they have the potential to drive meaningful change in the way homes are upgraded for energy efficiency and contribute to a more sustainable future. For more information, visit the U.S. Energy Department website.