As energy costs continue to be a concern for homeowners nationwide, the Inflation Reduction Act remains a cornerstone of federal efforts to make energy-efficient upgrades more affordable. By offering a mix of tax credits and rebates, the act helps lower utility bills while promoting sustainable home improvements.

Energy Efficient Home Improvement Credit

Originally set to expire in 2022, the Energy Efficient Home Improvement Tax Credit—better known as the 25C program—was revived and extended under the Inflation Reduction Act. Now valid through 2032 (and retroactive to January 1, 2022), this credit provides significant financial incentives for installing high-efficiency equipment. Homeowners can receive up to $600 for qualifying air conditioners and gas furnaces (with an annual cap of $1,200 per household), while installations involving heat pumps, boilers, or heat pump water heaters can earn credits up to $2,000. Keep in mind that meeting the program’s strict efficiency standards is essential to qualify.

High-Efficiency Electric Home Rebate Program

For those looking to upgrade to modern heat pump systems, the High-Efficiency Electric Home Rebate Program remains an attractive opportunity. With a $4.5 billion appropriation, this initiative offers substantial rebates to homeowners who install Energy Star-certified heat pumps. If your household income is below 80% of the local median, you might recover the full cost of your system. Even if your income falls between 80% and 150% of the median, you can still benefit from a rebate covering up to 50% of the cost. Additional rebates may also assist with upgrades to your home’s wiring, electrical service panel, and insulation.

Home Owner Managing Energy Savings Program

Despite its lengthy name, the Home Owner Managing Energy Savings (HOMES) Program is designed to deliver real savings for homeowners who invest in energy efficiency. This program rewards a broad spectrum of retrofits—ranging from heating and cooling systems to water heaters, insulation, and even duct sealing—with rebates based on the actual reduction in energy consumption. To qualify for a rebate of up to $2,000, your upgrades must achieve at least a 20% reduction in energy use. Greater savings, up to a maximum rebate of $8,000 for a 50% reduction, are available for more significant improvements. It’s important to note that these rebates cannot be combined with other federal efficiency incentives.

In summary, the Inflation Reduction Act continues to make energy-efficient home upgrades more accessible by offsetting installation costs through robust tax credits and rebates. If rising energy bills are a concern, now is an excellent time to consult with your local HVAC contractor to explore how these federal incentives can help you save money and enhance your home’s efficiency.