Did you know that if you live in New York’s Hudson Valley you are eligible for a new 50 percent rebate when you install an electric vehicle charger in your home? Or that you can get $1,200 back if you install a Wi-Fi-enabled EV charger at home in Austin, Texas? And in California, homeowners who install solar panels receive $3 off their power bill for each kilowatt of solar energy they can generate.
These are just a few examples from the galaxy of incentives and subsidies available for American households who invest in renewable energy and EVs. Some of these date back more than 20 years, whereas others were recently implemented — and with the federal Inflation Reduction Act now in effect, there are even more incentives on the way.
What’s in it for you?
“There’s quite a lot offered in this bill for the individual,” says Russell Mendell, an energy policy analyst for the Rocky Mountain Institute (RMI), a non-profit organization devoted to clean energy. The bill includes a direct payment provision that allows tax credits to be paid directly to taxpayers when they don’t have enough tax liability to fully utilize the tax credit. It also allows cities and other local authorities to take advantage of the tax credits, giving them more flexibility to embark on clean energy programs, including offering incentives to their residents.
Mendell says it’s a good move. “I think direct pay should be universal,” he says. A recent study by researchers at George Washington University found that direct rebates are more effective than tax incentives at getting consumers to switch to electric vehicles, largely because they reduce the up-front cost of buying a new car.
Federal incentives: cash in hand
The High-Efficiency Electric Home Rebate Program is an example of the kind of direct pay being offered by the new law. All told, homeowners can benefit from more than $18,000 in rebates — that’s money up front, not tax credits — to make their homes more energy efficient. Here’s what rebates are included in that number:
- $8,000 to install heat pumps
- $4,000 offered to upgrade electrical panels
- $2,500 to improve electrical wiring
- $1,750 for heat pump water heaters
- $1,600 to improve insulation and sealing
- $840 for electric stoves and heat pump clothes dryers
More federal tax credits
The law also adds to a host of federal tax credits and other incentives already in place. Here’s what to look out for:
- The Energy Efficient Home Improvement Credit more than doubles an existing $500 tax credit by offering $1,200 for new energy-efficient insulation, windows, doors and roofing. Depending on their income, some families can also take advantage of an additional $2,000 credit for heat pumps and heat pump hot water heaters.
- The Residential Clean Energy Credit, previously known as the Residential Energy Efficient Property Credit, raises the credit amount for installing a home solar, wind or geothermal energy source from 26 to 30 percent for the next ten years. The credit also covers any kind of home battery storage, regardless of energy source, as long as it has a capacity of at least 3 kWh.
- There’s no limit on how much you can claim; as Consumer Reports notes, “you’re entitled to that 30 percent tax break whether you spend $20,000 or more than $100,000 on costs associated with a residential solar system.”
It’s a lot to consider. To make things easy, the White House has prepared an interactive graphic that tells you about the various rebates and credits available for every room in your house. Some highlights:
- Want to buy an EV? You can take advantage of $7,500 in tax credits for a new vehicle and $4,000 for a secondhand one.
- Interested in that 30 percent tax credit for installing clean energy? It will save the average family $9,000 over the life of their rooftop solar system.
State and local incentives
The incentives don’t just stop at the White House. States, counties and cities across the country have their own clean energy programs. Many will be bolstered by Inflation Reduction Act funding, although RMI notes it may take up to two years for local governments to roll out their own initiatives.
For now, there’s an important resource for any homeowner interested in knowing which credits and rebates they can use where they live: DSIRE. Run by the NC Clean Energy Technology Center at North Carolina State University, this database catalogs policies and incentives in each state. There are a lot of them: 163 in California, 115 in Texas and 103 in New York, to name just three states.
They can be very specific in scope. Here’s just a handful of examples:
- In Glendale, California, residents can apply for an $80 rebate for any Energy Star refrigerator they buy within city limits. There are rebates on a range of other appliances, too, rising in value up to $599 for Level 2 EV charging stations.
- In Austin, Texas, households that install grid-connected solar panels can get up to $2,500 in cash back through a municipal rebate program.
- Customers of Central Hudson in New York’s Hudson Valley and Catskills regions are eligible for a 50 percent rebate on the cost of an EV charger.
- Live in Marin County, just outside of San Francisco? You can get at least $4,050 in rebates for heat pumps, energy-efficient electric cooktops and more.
- Residents of New Mexico who install solar panels on their property can claim back 10 percent of the purchase and installation costs — up to $6,000 per year — off their personal income taxes.
A big return on investment
All of this adds up to a lot of money. Even before the Inflation Reduction Act was passed, existing clean energy tax credits were on track to save Americans $5 billion in annual energy costs by 2024, according to research by RMI. The amount varies significantly from one state to another, though, with the average household in New Jersey saving just 21 cents on their annual bills, compared to $165.40 for households in Oklahoma. But that doesn’t include all the money saved on new solar panels, batteries, EVs and other items essential to a more resilient future.
It’s a crucial moment in the move towards clean energy. “The world is crossing into a mass-adoption moment for green technologies,” noted Bloomberg in a report published this month. Think of all the federal, state and local incentives as a helping hand pulling you into the future — a future that is more sustainable for the environment, and a lot lighter on your wallet.