Tax Benefits and Rebates for Home Energy Improvements
What should you know before the end of the year?
By Johani Carolina Ponce
President Biden’s Inflation Reduction Act not only seeks to combat climate change, but also to give Americans the opportunity to reduce their carbon footprint through financial incentives to improve energy efficiency in their homes. This is a key time to take advantage of tax rebates and credits before the change of administration and the close of fiscal year 2024, which will take place on December 31.
Rebates and Tax Credits for Energy Improvements
Homeowners can qualify for up to $14,000 in rebates and tax credits, which can cover a wide range of energy improvements, from installing heat pumps to purchasing efficient electric appliances such as stoves and dryers. Not only does this contribute to reducing energy consumption and carbon emissions, but it can also help households save on costs in the long run.
What types of rebates and credits exist?
1. Energy Efficient Home Improvement Credit: This credit covers up to 30% of the costs of energy improvements, with an annual limit of $1,200. Eligible improvements include installing insulation, efficient windows, and more efficient heating and cooling systems.
2. HOMES Rebate Program: Through this program, homeowners can receive rebates for making changes to their home that reduce energy use by at least 35%. Low- and middle-income households can qualify for up to $8,000 in rebates, while higher-income households can receive up to $4,000.
3. HEEHRA (High-Efficiency Electric Home Rebate Act) Program: This program offers rebates specifically for households that want to electrify their systems. For example, installing heat pumps or electric dryers can qualify for a rebate of up to $14,000, depending on household income.
What improvements are covered?
• Heat pumps: An efficient device that offers both heating and cooling. They can help reduce electricity use by up to 50% compared to traditional heaters.
• Electric appliances: Replacing gas stoves with electric stoves, for example, can qualify for a rebate of up to $840.
• Electrical infrastructure improvements: Up to $4,000 can be obtained to update the home’s electrical service, ensuring that it is ready for new technologies.
• Insulation and ventilation: Homes can receive up to $1,600 to improve insulation and reduce energy loss.
Please note that it is advisable to make the improvements and claims before the end of the tax year.
If you want more information on how to qualify for these benefits and what improvements to make, you can consult the following link: https://www.irs.gov/es/credits-deductions/energy-efficient-home-improvement-credit.
