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You Could Save $800 on a New Stove With This Government Rebate
Are you in the market for an energy-efficient appliance? Rebates funded by a new federal law could help save you money.
New energy-efficient rebate programs are aimed at helping low- and middle-income Americans go green by giving discounts on things like electric stoves, heat pumps and ventilation upgrades.
These rebates are funded through the Inflation Reduction Act, a sweeping piece of legislation aimed at combating climate change signed into law Aug. 16.
Details of the rebate roll out are still murky, but here’s what you need to know.
Numerous rebates on energy-efficient appliances are available through the Inflation Reduction Act.
The law provides $4.5 billion in funding for these rebates, and outlines specific amounts homeowners can qualify for.
Here’s a roundup of appliance and equipment rebates. You could get up to:
The act doesn’t lay out any high-efficiency requirements for these rebates beyond the minimum standards required by the U.S. Department of Energy.
There are rebates for home upgrades too. You could get up to:
Aside from the appliance-specific rebates mentioned above, you can qualify for a rebate by completing a more holistic energy improvement project.
Specifically:
An additional $4.5 billion in federal funding is earmarked for this program, known as Home Owner Managing Energy Savings (HOMES) rebate program.
These rebates come with income limits. And those limits will vary based on where you live.
Specifically:
Figures from the Department of Housing and Urban Development (HUD) will be used to determine median income. You can find your area’s median income by using this tool on HUD’s website.
States will decide how to define an “area.” It could be based on the median income of your zip code, city, county or state.
These limits will vary across the country. The median income in Boise, Idaho, is $87,500, for example, but $134,600 in Seattle and $65,000 in Joplin, Missouri.
The federal government will give each state grant money to implement its own rebate program.
The U.S. Department of Energy has laid out a rough framework for states to follow, but it’s up to states and tribal governments to establish their own qualifying programs.
There is $9 billion in total funding earmarked for rebates, and that money will be available to states through September 2031.
Don’t expect these measures to go into effect right away. It might be a while before these energy-efficient home rebates actually reach consumers.
States must apply and get approval for the funding first, and experts say it could take months for states to set up their own individual programs after that.
It also isn’t clear exactly how the discounts will be applied. It will likely be at the point of sale, though state-run agencies may award the rebates directly to consumers.
In the meantime, save any receipts and paperwork related to the purchase of appliances or improvements that may qualify and make sure to follow your state’s specific rules when they roll out.
No, but the Inflation Reduction Act does provide a host of federal tax credits to Americans who make certain energy efficient upgrades to their homes.
These tax credits, unlike the rebates, will be available regardless of your income.
You can start claiming these tax credits on your federal income tax return starting next year.
One provision provides up to a 30% tax credit if you purchase and install solar panels on your roof or a battery storage system with a 3 kilowatt hour capacity or higher.
You can also qualify for up to $1,200 in other various energy-related tax credits each year. Credits will be available for 10 years starting in 2023.
These credits include but are not limited to:
There’s one exception to the $1,200 annual tax credit limit: You can qualify for a larger, $2,000 credit by installing electric or natural gas heat pumps and/or biomass stoves and boilers.
Aside from credits for home improvement projects, you can also qualify for tax incentives if you purchase a new or used electric vehicle.
All of these tax credits are nonrefundable. That means they reduce how much you owe the federal government at tax time, but they won’t boost your tax refund. If you don’t normally owe money at tax time, these credits likely won’t do much.
Feeling confused? Get a refresher on how tax credits and tax deductions work.
Rachel Christian is a Certified Educator in Personal Finance and a senior writer for The Penny Hoarder.
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