Here’s how much money you’ll get with the Inflation Reduction Act

The Inflation Reduction Act (IRA) is a “free electric bank account with your name on it.” It’s packed with rebates and tax credits that help Americans purchase everything from EVs to solar and electrical appliances to heat pumps. Check out this easy-to-use IRA savings calculator from Rewiring America that tells you what you get – and when.

Rewiring America is an electrification nonprofit whose “purpose is to make electrification simple, measurable, and inevitable.” Rewiring America’s IRA savings calculator indeed makes it simple.

In my electrification journey, I’ve found that I have to do my own research and share what I Iearn. Electricians, heat pump installers, and car dealerships are working to get up to speed, but they’re still learning about how the IRA tax credits and rebates work.

The folks who are helping us to electrify want to know about the IRA rebates and tax credits, and they seem to genuinely want to help me in turn.

Inflation Reduction Act federal tax credits

I upgraded to a 200-amp service panel and had rooftop solar and Tesla Powerwalls installed last fall, so the IRA savings calculator has saved me a lot of money.

The calculator confirmed that we could claim a 30% tax credit for solar, a 30% tax credit for battery storage installation, and a 30% tax credit, capped at $600, for our electrical panel upgrade. It also told me which tax forms to use.

The Rewiring America calculator also provides info about tax credits for EVs. This year, not only was I able to confirm that the Model Y I just leased qualified for the $7,500 upfront federal tax credit; it also informed me about state and utility rebates that I can apply for, resulting in a $2,200 rebate.

Inflation Reduction Act federal rebates

On July 27, 2023, the US Department of Energy (DOE) rolled out guidelines for states, territories, and the District of Columbia to apply for their share of $8.5 billion in electrification and energy efficiency rebates provided by the IRA.

Rebates include home electrification and appliance rebates that will act as immediate discounts at the point of sale for low- and moderate-income households when making qualifying electrification purchases. (More on that below.)

There’s also the Home Efficiency Rebates program (HER) that rewards energy efficiency retrofits. So, if you save a specific amount of energy and have receipts, then you get a rebate. It’s not income-capped, but at least half of the program’s funding will go to low-income households.

The IRA rebates are still not yet available. Rewiring America explains:

The rebates will roll out state by state, and the timing and structure of the rebates will vary…

… Based on the latest information, we think that a handful of states will launch their rebate programs in 2024, but most state programs will come online in 2025. 

I was hoping to see the rebate program roll out faster this year – mainly because the federal government said it would – but now we have to wait longer.

The ‘Smith family’

However, tax credits and some rebates can be claimed now, so it’s worth putting your info into the IRA savings calculator. Type in your zip code, homeowner status (renters qualify, too), household income, tax filing status, and household size into the IRA Savings Calculator, and click “View results.”

It then identifies your utility and you select your project from the pull-down menu. It displays your personalized incentives and splits out tax credits from rebates.

I created the “Smith family” as a case study: a family of five, homeowner, household income of $120,000, head of household tax filing, zip code 19352 (that’s Pennsylvania).

I selected “water heater” and found that the Smiths qualify now for a $350 rebate for an ENERGY STAR® certified heat pump hot water heater; a 30% federal tax credit, up to $2,000, for a heat pump water heater when they file 2024 taxes; and eventually (and roughly) a rebate of up to $1,750, when it’s rolled out at point of sale.

Rebates are based on a percentage of area median income (AMI), and the Smith’s AMI is $114,700, as they live in the 19352 zip code area. (You can find your AMI using this Area Median Income Lookup Tool from Fannie Mae.)

Compared to the AMI for your region, any household with income less than 80% of AMI is considered low-income, and any household with income between 80% and 150% of AMI is considered moderate income. 

Low-income households could have 100% of their project costs covered by rebates (up to the individual upgrade caps, and up to the $14,000 overall limit). Moderate-income households could have up to 50% of their project costs covered by rebates, up to the same caps. 

If the Smiths want a new induction stove when rebates arrive, Rewiring America says:

The federal guidelines allow for a discount of up to $840. However, rebates will be implemented differently in each state, so we cannot guarantee final amounts, eligibility, or timeline.

So we can guess that the Smiths would probably get a rebate of $420, or 50%.

Home Depot sells induction ranges for between $1,000 and $3,000. If the Smiths opted for a lower-cost model – Samsung makes one for $1,098 – then their brand-new induction range could cost around $680. (As an aside, if you’ve never cooked on an induction range before, it’s fantastic. It’s as efficient as a gas stove but without the emissions, and you couldn’t burn yourself on it if you tried.)

Rewiring America also provides an easy-to-understand online guide to the IRA called “Go electric! (now).” You can access that here.

Read more: The US Treasury released EV charger tax credit guidance – here’s how to find out if you qualify

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