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What Is the Inflation Reduction Act? Here’s a Summary

Let’s be honest here: Conversations around energy efficiency can be confusing. There’s so much information, and it’s hard to break down what these policies and ideas even mean, much less how to make actual energy-efficient choices in your home.

Take the Inflation Reduction Act (IRA), for example. This legislation was passed in August 2022, and it aims to support families and homeowners who have made or are interested in making energy-efficient upgrades to their homes. But how does that work, exactly?

Because Drew and Jonathan are big advocates for home electrification and access to renewable energy, they want to do their best to help spread the word about bills like the IRA and beyond. Whether it’s through creating documentaries like Power Trip; exploring and learning from environmental experts on Drew and Linda’s At Home podcast; or collaborating with organizations like Rewiring America, Drew and Jonathan are working to ensure every family understands how they can build a better future for themselves and the world around us.

So if you’re interested in learning more about what’s included in the IRA, we’ve got a preview of what’s to come and some frequently asked questions addressed here! The biggest tip, though: Stay educated on the latest updates so you can be ready to act when the time comes.

First Up: What is the Inflation Reduction Act and what does it do?

The IRA incentivizes people to make swaps that improve their homes while also lightening the financial and environmental load. Basically, putting money right back into your pockets. The clean energy provisions will come in the form of tax breaks and rebates for installing things like:

  • Heat pumps
  • Solar panels
  • HVAC machines
  • Electric water heaters
  • Electric stoves
  • Electric vehicles
  • And more

Tell me more about the tax credits and rebates. What are they and how do I know if I qualify?

The IRA will offer both tax credits and direct homeowner rebates. Here’s what to know about both: 

Tax credits: The Energy Efficiency Home Improvement Credit provides a tax credit for energy-efficiency improvements in residential homes, which could include the purchase of heat pumps, insulation, efficient doors and windows, electrical panel upgrades, and energy audits. You can get up to $3,200 annually in tax credits to lower the cost of these upgrades by up to 30 percent. The Residential Clean Energy Credit provides a 30 percent tax credit to lower the installation cost of residential clean energy, including rooftop solar, wind, geothermal, and battery storage. The credit steps down to 22 percent by 2034. 

Rebates: The High-Efficiency Electric Home Rebate Program is a provision in the IRA that has allotted $9 billion to award grants to state energy offices and Tribal entities to develop and implement a high-efficiency electric home rebate program. Within this program, individual homeowners and consumers can receive rebates for energy efficient retrofits ranging from $2,000-$4,000 for individual households and up to $400,000 for multifamily buildings. Maximum rebates double for retrofits of low- and moderate-income homes. 

If you want to dig even deeper, Rewiring America has compiled a helpful calculator that maps out some of these options. It’s important to note, though, that these values are estimates and will vary by state. You can also seek out additional info about your specific area using tools like the “Rebate Finder” for Energy Star products.

Because the rebates are not yet currently available, though, you’ll want to remain diligent and proactive, too. A few things you can do to be prepared for when funding is available are to save your receipts, research and plan for the appliances you want to replace, communicate with your contractor to ensure they’re aware of the IRA and options surrounding it, and continue to educate yourself on the steps involved in the process. That way, you’ll be ready to take full advantage of the rebates when they come around.

That brings me to my next question! Where else can I get resources and updates about the IRA?

Rewiring America has an entire guide you can download and it includes need-to-knows about incentives, equipment overviews, case studies, checklists, and more. Their newsletter shares important updates, too. Energy.gov also has resources that may be helpful. Also remember to chat with your contractor about the IRA—if they don’t realize you’re interested in participating, they may not think to suggest or install the eligible appliances. 

So, what should I do next?

If you want to take full advantage of the IRA, explore the benefits that may apply to you when they become available and spread the word! Drew and Jonathan are also speaking more about how these benefits and appliances are good for families and their homes during Hearst’s Eco-Conscious Living Summit, which you can stream live at this link on April 28 at 12 p.m. ET.

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