Making energy efficiency upgrades to your Pennsylvania or New Jersey home is easier than ever before with the Inflation Reduction Act. We’ve put this guide together to help you learn how to maximize your savings on improving your home’s performance and start benefiting from a more comfortable, and efficient home.
What is the Inflation Reduction Act?
The Inflation Reduction Act (IRA) is the biggest climate investment by the federal government in history. Within the IRA are several new and revitalized tax credits and rebates to make clean energy more accessible for all.
What Are Tax Credits & Rebates?
A federal tax credit reduces the amount of income tax you owe to the government. It is a dollar-by-dollar reduction of your taxed income that will lower your tax bill or even increase your refund amount. The IRA tax credits are nonrefundable, which means you won’t receive a refund for any excess on the credit.
A rebate is a discount that can usually be received either at the time of purchase or through a mail-in process. While some IRA rebates do specify they will be available at the “point-of-sale”, details have not been released as to how homeowners will be able to qualify or claim them.
Inflation Reduction Act Tax Credits
Known as the Energy Efficient Home Improvement Tax Credit, this federal tax credit allows homeowners to save up to 30% on qualifying home improvements. This tax credit improved on the older 25C tax credit and you can now claim up to $3,200 every year from now until 2032. Homeowners just need to file IRS Form 5695 with their annual tax returns to claim this tax credit.
Claim up to a combined $2,000 annually in IRA Tax Credits for:
- Heat pumps (including ductless mini split heat pumps)
- Geothermal heat pumps
- Heat pump water heaters
Claim up to an additional combined $1,200 in IRA Tax Credits for:
- Insulation and air sealing ($1,200 max, materials only)
- Energy-efficient furnaces ($600 max)
- Energy-efficient air conditioners ($600 max)
- Energy-efficient water heaters ($600 max)
Inflation Reduction Act Rebates
The Inflation Reduction Act also includes two rebate programs designed to make efficiency upgrades more affordable, however, they aren’t yet available. Each state will be responsible for obtaining the funds and distributing them to residents. Both Pennsylvania and New Jersey already have robust climate plans and will apply for the funding to make the IRA rebates available to homeowners as soon as possible.
HOMES Rebate Program
The Home Owner Managing Energy Savings (HOMES) program provides rebates for home performance upgrades based on the amount of energy savings the upgrades lead to (or are estimated to create).
High-Efficiency Electric Home Rebate Program
The High-Efficiency Electric Home rebate program is exclusively for low to moderate-income households and cannot be combined with the HOMES program or any other federal grants and rebates.
Don’t Wait for a Healthier Home—Act Now!
While it may seem like a good idea to wait for the IRA rebates to start your home performance project, we don’t recommend it. There is no saying exactly how long it will take for these rebates to get to homeowners, and there are already a number of other rebates and incentives available in Pennsylvania and New Jersey, on top of IRA tax credits!
Every month you wait to upgrade your home, you’ll also be paying more for heating and cooling costs and missing out on other benefits like better indoor air quality and more home comfort.
Upgrade your home’s performance with Princeton Air. Call 609-799-3434 or contact us online.