The IRA creates thousands of dollars in incentives for some homeowners to install energy-efficient electric stoves, improved insulation and solar panels.  The law keeps the price of installing solar power on a house artificially low, by increasing tax credits that were otherwise set to expire at the end of 2022.

Currently, homeowners can claim a 26% tax credit for a solar power system installed between 2020-2022. The credit was due to decrease to 22% for systems installed in 2023 and scheduled for expiration in 2024. Now, the IRA has  increased it to 30% for systems installed in 2022-2032. in 2033 it will revert to 26%. Good for the wallet, the grid and climate.

The old Non-Business Energy Property Credit

Renamed the “Energy Efficient Home Improvement Credit,” this tax break was worth 10% of the install costs for certain energy-efficient insulation, windows, doors, roofing, and similar energy-reduction improvements in homes. The credit could also be used for 100% of costs associated with installing certain energy-efficient water heaters, heat pumps, CAC systems, furnaces, hot water boilers, and air circulating fans, but–and it was a big but– there was lifetime limit of $500 for the credit. There was also a $200 lifetime limit for new windows. There were also other individual credit limits for air circulating fans ($50); some furnaces and boilers ($150); and certain water heaters, heat pumps, and air conditioning systems ($300). These rules will still apply for the 2022 tax year.

Fortunately, in 2023, the revised credit will be equal to 30% of the costs for all eligible home improvements made during the year under the IRA, and it will expand to cover the cost of certain biomass stoves and boilers, electric panels and related equipment, and home energy audits. Roofing, and air circulating fans will no longer qualify for the credit, unfortunately.

Exact rebate amounts will vary based on an individual’s income compared with the median area income for the Homes Rebate program portion of the IRA. Eligible items are heat pumps for water heaters (up to $1,750) and space heating/cooling (up to $8k), electric stoves, ovens and electric heat-pump clothes dryers (up to $840), an upgrade to circuit breaker boxes (up to $4k), improvements to insulation and ventilation (up to $1,600) and improvements to wiring (up to $2,500).