On August 16, 2022, the Inflation Reduction Act was signed into law by United States President Joe Biden. The $738 billion law is described as landmark legislation that aims to help reduce the national deficit, curb prescription drug prices, invest in domestic energy production, and promote clean energy in the United States.
To the tune of $391 billion, the Inflation Reduction Act, or IRA, represents the single largest investment to address climate change in United States history – and it aims to do this both on a macro and micro level. In addition to an investment in electric vehicles and electric vehicle infrastructure, climate-smart agriculture, and habitat protection, the IRA has also allocated $22 billion in home energy improvements. Specifically, Americans who take matters into their own hands to reduce their carbon footprint on qualifying purchases can receive up to $14,000 in rebates and tax credits. Here’s a closer look at how Louisvillians can qualify for such rebates and credits:
Lousivillians and the Inflation Reduction Act: How to Improve Home Efficiency
It’s estimated that about 40 percent of all carbon emissions come from homes and buildings. Hence, incentivizing property owners and property managers to adopt more efficient equipment is a way that the IRA aims to help achieve the United States’ long-term carbon emissions goals. There are two types of rebate programs Americans qualify for under the IRA:
- HOMES: This is a rebate program that offers rebates to homeowners based on how much more energy efficient an upgraded home becomes. Rebate amounts are doubled for low and medium-income households.
- HEEHRA: The High-Efficiency Electric Home Rebate Act, or HEEHRA, is a rebate program designed for low and middle-income households. Rebates are capped at $14,000 and cover qualifying upgrades that help to electrify a household.
HOMES rebates are applicable for broader whole-house energy savings retrofits, while HEEHRA rebates are more appliance-specific.
The IRA also expands the Energy Efficiency Home Improvement Tax Credit, which covers up to 50 percent of energy upgrade costs and caps such coverage at $2,000 per year. This tax credit was available before the IRA passed but was a lifetime tax credit, meaning that you could only claim it once. Thanks to the IRA, the Energy Efficiency Home Improvement Tax Credit is now annual and can be claimed once a year.
Keep in mind that rebates, such as the HOMES and HEEHRA rebates, are point-of-sale, so qualifying purchases will receive them in the near term. Tax credits, conversely, are claimed when you file your taxes annually and can help add to your tax refund or reduce any tax bill you may owe to the IRS.
One of the specific appliance upgrades that qualify under the HEEHRA rebate is heat pump installation, which homeowners can receive up to $8,000 for. Heat pumps work to both cool a home during the summer months and heat a home during the winter months and can halve electricity use compared to conventional heaters. They also don’t run on gas or oil, as some conventional heaters do.
Other high-efficiency heating and cooling equipment are also covered under the IRA. For instance, high-efficiency furnaces, air conditioners with high SEER ratings, and mini splits can all help improve a home’s carbon footprint.
How Air Comfort of KY, Inc. Can Help
For more information about the Inflation Reduction Act and what home-specific upgrades qualify for rebates or tax credits, contact Air Comfort of KY, Inc. today. We’re committed to helping homeowners in the Louisville region fully take advantage of this government program to help improve efficiency in their homes and reduce utility costs to boot. Contact us today for more information.