The Inflation Reduction Act signed by President Biden in August includes about $370 billion to combat climate change, part of which will help consumers buy energy-efficient appliances, plug-in cars, and more. , and renewable electricity for home use.
But capitalizing on these savings requires patience and initiative.
The Biden administration website Designed to help you keep track of improvements to your cars, appliances, and homes that qualify for tax credits and rebates. The answer is often not yet clear, either because the program is so new, or because the legal requirements are so stringent. White House officials say the website will be updated frequently as details are finalized, and consumers are encouraged to subscribe to receive updates via email.
Here’s what we know so far about how the new laws can save you money. What all merits have in common is that each will last at least until his 2032.
Improving home energy efficiency
The new law extends an existing program through 2032 that allows homeowners to claim a 30% credit on their federal tax returns for home energy efficiency improvements such as windows and insulation. Buyers can charge up to $600 per purchase for up to $1,200 annually.To qualify for the tax credit, the item must Energy Star Most Efficient certification. The homeowner can also claim her $150 tax credit for home energy audits.
Home Renewable Energy Equipment
Homeowners can still claim a 30% federal tax credit for renewable energy investments such as rooftop solar panels and geothermal heat pumps. You can also claim new credits for batteries intended to store power from renewable sources. There is no limit to the amount you can claim. In 2033, credits will drop to 26% of the total purchase price, 22% in 2034, and will be phased out the following year.
Energy Efficient Appliance Rebates
The law establishes new rebates for the purchase and installation of energy efficient appliances such as air conditioners, dryers and electric induction stoves.
The rebate program is state-run and the amount you can receive depends on how your income compares to the state median level.
If you earn up to 80% of state median income, you can recoup 100% of the cost of energy efficient appliances or home improvements through our rebate program. If you make 80-150 percent of the median state income, you can recoup 50 percent of your expenses, up to $8,000.
To receive the rebate, you’ll probably need to document your income and appliance costs to the state. How quickly this program will be implemented and how smoothly it will work may vary from state to state. White House officials say they hope the federal website will direct consumers to state rebate programs as they become available.
heat pump
New law drafters want Americans to use electric heat pumps. Electric heat pumps are he one of the most energy efficient ways to heat and cool a home. Consumers can take advantage of the new federal tax credit to pay up to $2,000 to purchase and install a heat pump. Additionally, those who qualify for the state rebate program can receive up to $8,000.
The law also includes reimbursements of up to $4,000 for upgrading your home’s power system to install heat pumps and other energy-efficient appliances.
Like other rebates for consumer electronics, heat pump rebates will be available statewide.
new electric car
The legislation expands an existing program that gives new electric vehicle buyers a tax credit of up to $7,500 if the vehicle is assembled in North America, but adds new requirements regarding income and location of assembly.
Under the current program, which expires at the end of 2022, automakers that have sold more than 200,000 electric vehicles this year are not eligible for electric vehicle credits. credit. However, some electric vehicles made by Ford, Honda and Subaru are tax deductible for drivers. to the IRS complete list The car that is eligible for the credit and its amount.
Starting in 2023, GM, Toyota and Tesla vehicles will again be eligible for credit. However, it introduces some new income requirements. Credits are available only to individuals with less than $150,000, single householders with less than $225,000, and married couples with combined income less than $300,000. Available only for sedans priced under $55,000 or trucks, vans, and SUVs priced under $80,000.
Also, starting in 2023, credits will vary based on the volume of vehicles assembled in the United States. Receive a $3,750 credit for electric vehicles assembled and battery components manufactured in North America. If the minerals used in the battery are mined in a country with which the United States has an agreement, you will receive an additional $3,750. free trade agreement.
After 2024, the credit applies only to batteries that do not contain parts manufactured in China, Russia, North Korea, or Japan. After 2025, credits will not apply if even one mineral used in batteries is mined or processed in any of these four countries.
The provision is intended to force automakers to shift their electric vehicle supply chains from other countries, particularly China, to the United States.
used electric car
For the first time, buyers of used electric vehicles are eligible for a tax credit equal to 30% of the total cost of the vehicle, up to $4,000. Credits apply only to vehicles valued under $25,000, with a total credit limit of $75,000 for individuals, $112,500 for singles, and $150,000 for couples.
Used vehicles must be purchased through a dealer, but there are no American Made or content requirements.
In 2022 and 2023, you can claim the new electric vehicle tax credit on your federal tax revenue form, but starting in 2024, you can transfer the credit directly to your dealer and receive cash at the time of purchase.