Bryce Jones for Better Homes & Gardens on how to profit from the Inflation Reduction Act. Let the Professionals at SRB Signature Kitchen and Bath help you with your next kitchen or bathroom renovation.
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It’s time to start investing in your home’s efficiency.
The Inflation Reduction Act of 2022 (IRA) has been called the largest climate investment this country has ever seen. Signed into law by President Biden on August 16, the act delegates more than $375 billion for “Energy Security and Climate Change.” This is a big deal for many reasons, but it’s especially beneficial to homeowners.
The new act has established more tax credits and opportunities to get money back when you tackle projects focused on energy efficiency. Now is the time for homeowners to invest in the sustainability of their home—and even make other upgrades that improve the overall condition and comfortability—and get money back through rebates or tax credits.
Think of how often you cool or heat your house, leave your lights on, turn on your stove, throw your clothes in the dryer—more than 150 million homes exist in the U.S., and the residential carbon footprint from all these daily activities makes up about 20% of greenhouse gas emissions in the U.S.
“The bulk of built homes are 40 years or older,” says Mallory Micetich, an expert at home improvement service Angi, who also previously worked as a Natural Resources Committee member on Capitol Hill and has been a homeowner since 2014. “So we’re talking like the 1990s. We now know a lot more about how to make homes efficient. Technology in the home has come a long way, so there’s definitely a lot of work that has to be done in terms of retrofitting.”
Beyond helping the planet, taking on these projects can also save you cash in two different ways: The tax credits and rebates given through the IRA and help reduce your energy bills.
One of the main incentives is the Energy Efficient Home Improvement Credit, which allows households to deduct up to 30% of home update costs that increase efficiency (like replacing your single-pane windows with double-pane, upgrading your breaker box, and more). The credit lasts until 2032, and you can receive up to $1,200 in a year (with the exception of installing a heat pump, which allows you to deduct up to $2,000). For rebates, a fact sheet from the White House says households will be able to receive up to $14,000 for buying new appliances.
“The net goal of a lot of these incentives is to reduce to a single source of energy, mainly electric,” Micetich says. “Then as the grid is driving more efficiencies, aka utilizing more efficient forms of energy like solar, wind energy, and hydropower, then homeowners by extension are able to use those more efficient sources.”
The amount of information packed into the IRA can seem overwhelming, so here’s a breakdown of key takeaways you need to know to make the most of the opportunities it’s created and improve your home for years to come.
1. Get a home energy audit.
Micetich recommends this as a first step to achieving a more efficient home. An auditor can tell you exactly what your systems need, which helps lead to running your heating and cooling less (for example) and lower energy bills. Plus, it’s covered up to $150 through the IRA.
2. Do your research, and hire a professional you trust.
These aren’t DIY projects you can tackle in a weekend. If you don’t have the time, tools, or talent, consider hiring a professional to do your installations and upgrades. Make sure to read reviews, ask for referrals, and call around before deciding on who to go with so you feel comfortable and know you’re getting a fair deal.
3. Remember that the projects being incentivized aren’t anything new.
While the IRA is introducing new incentives, you’re likely familiar with the recommended upgrades and their technology (spray foam insulation, for example). “It’s not something brand new where a homeowner is like, ‘Oh my gosh, I’m gonna be the first one to do this in my city,'” Micetich says. “[The legislators] really have made some of these energy efficient projects attainable for every homeowner.” In fact, many are geared toward moderate- to low-income households.
4. Start small.
Tackle more affordable and smaller-scale projects like putting in new windows and doors or upgrading to an electric stove before moving to larger projects, such as installing heat pumps or a more efficient HVAC system. That way, you can get a feel for how the incentives work before making any major changes.
5. Be patient and make a plan.
“If you put together a plan [now], you will be able to, in the short term and long term, save money on your bills, save money on these projects, and also be working your way toward contributing to a more energy efficient future,” Micetich says. You can use this IRA Calculator tool by Rewiring America to track your savings and find a list of projects. She also urges homeowners to practice patience, especially in terms of cashing out on rebates, since it’s a brand-new program.
6. Know that your efforts contribute to a healthier planet and a long-standing home.
Essentially, participating in these projects gets you a return on your investment in the future. There’s never been a better time to prioritize caring for and improving your home. “This is something that is going to pay you in the short term and the long term,” Micetich says. “These energy savings in terms of your bills and your utilities are very real. And the more we can do to help make sure the homes that are around today are around for another 20, 30, 40, 50 years—it’s really something we should be focused and thinking on.”