High-Efficiency Electric Home Rebate Act (HEEHRA)
Formerly known as the Zero-Emission Homes Act (ZEHA) and part of the 2022 IRA, HEEHRA allocates $4.5 billion dollars to individual states to help low- and moderate-income residents create energy-efficient homes, save on monthly utilities, and lower their carbon footprints. Through point-of-sale rebates on electrification appliances and equipment, HEEHRA offers 100% rebates (up to $14,000) on electrification projects for low-income households and 50% rebates (again, up to $14,000) for households with "moderate" incomes.
Some items included in these rebates include:
Also included are "enabling measures," like upgrading ventilation, circuit panels, air sealing, insulation, and wiring.
While the IRA itself took effect on January 1, 2023, states are still developing their programs, so you can’t access these rebates at the moment. The good news is that the program is set to run through September 30, 2031 — so you've got plenty of time to plan your home electrification project.
Related Post: What Is Home Electrification, and Is It for Me?
Homeowner Managing Energy Savings (HOMES)
Like HEEHRA, the Homeowner Managing Energy Savings program (HOMES) stems from the 2022 IRA and allocates $4.3 billion dollars to individual states' energy offices. Also like HEEHRA, this allocation is designed to provide rebates to help Americans create more energy-efficient homes — but that's where the similarities stop.
Unlike HEEHRA, HOMES doesn't provide point-of-sale rebates on equipment purchases. Instead, it offers rebates based on actual home performance. These rebates fall into two distinct camps:
The modeled-performance rebates are just that — rebates based on the projected ability of an improvement to increase home energy efficiency as compared to historic usage.
Contractors or other program implementers will use energy modeling software to establish an initial baseline for your home's energy consumption and to propose a new energy model depending on the type of retrofit you've undertaken and your home's historical energy usage. How much of a rebate can you expect from this model?
For low- and moderate-income homes:
Retrofits that achieve energy system savings of at least 20% but less than 35% are eligible for the lesser of $4,000 or 80% of the project cost.
Retrofits that achieve energy system savings of at least 35% are eligible for the lesser of $8,000 or 80% of the project cost.
For high-income homes:
Retrofits that achieve energy system savings of at least 20% but less than 35% are eligible for the lesser of $2,000 or 50% of the project cost.
Retrofits that achieve energy system savings of at least 35% are eligible for the lesser of $4,000 or 50% of the project cost.
It's worth noting that projects that result in energy savings of less than 20% aren't eligible for rebates, regardless of cost. If you’re concerned about the risk of investing in a home improvement project that doesn’t earn you a rebate, you can help protect your investment by selecting a Pearl Network Contractor. Every Pearl Network Contractor is vetted by Pearl and must meet stringent requirements to earn admittance into the network. Login to the free Green Door app and use the Contractor Search to locate a qualified contractor near you.
Unlike rebates based on performance models, measured-performance rebates are based on your home's actual energy performance. These rebates require the use of an approved open-source measurement and verification (M&V) software to — you guessed it — measure and verify your home's energy savings based on your historical and future utility bills. Don’t worry, you’d still get the rebate up front, most likely through an aggregator, who would in turn be paid once the savings are demonstrated. The rebates available here are structured similarly to the model we just discussed:
For low- and moderate-income homes:
- Retrofits that achieve energy system savings of at least 15% are eligible for a rebate paid based on the number of kilowatt hours saved. Rates will be set at the state level based on the energy usage of an “average home” in that state. Alternatively, rebates may be issued up to 80% of the project cost.
For high-income homes:
- Retrofits that achieve energy system savings of at least 15% are eligible for a rebate paid based on the number of kilowatt hours saved. Rates will be set at the state level based on the energy usage of an “average home” in that state, and will be lower than the rates for low- and moderate-income homes on a per kilowatt hour basis. Alternatively, rebates may be issued up to 50% of the project cost.
Like modeled-performance rebates, if the actual savings resulting from your improvement is less than 15%, you're not eligible for a rebate. Also, the bill itself doesn't specify that homeowners pursuing measured-performance rebates are automatically given the lesser of the amounts above, but it may be wise to operate under that assumption.
Clean Energy Tax Credit (Code § 25D)
Also stemming from the 2022 IRA are an array of tax credits designed to promote the use of clean and efficient energy sources by homeowners. Fortunately, they're all much simpler to understand than the rebates available through HEEHRA and HOMES.
Under Code § 25D, between now and 2032, homeowners can qualify for a 30% tax credit on purchases of or expenditures related to qualified:
Solar electricity generators
Solar water heaters (if at least half of the energy used in your home comes from the sun)
Fuel cells and battery storage with a capacity of at least three kilowatt hours
Small wind energy generators
Geothermal heat pumps that meet ENERGY STAR® requirements
One limitation to note is that to qualify for these credits, each of these purchases or expenditures has to be linked to your primary residence. If, say, you buy solar panels for a business that's not run out of your home, you won't qualify.
Perhaps to get homeowners to act sooner rather than later, these credits begin to shrink starting in 2033. That year, they'll drop from 30% to 26%, and again to 22% the following year.
Related Post: Solar Energy: How to Get Started, Confidently
Energy Efficient Home Improvement Tax Credits (Code § 25C)
Like the credits available via 25D, the credits offered through Code § 25C are easy to understand and relatively easy to qualify for. Homeowners who make efficiency upgrades, like better insulation and improved heating equipment can claim a rebate of up to $1,200 or 30% of project costs on their annual tax returns.
Furthermore, homeowners who install heat pumps can claim up to $2,000, and another $600 is available for homeowners who make upgrades to their electrical panels. Lastly, homeowners who coordinate with their utility provider to conduct a home energy audit (sometimes called a "home energy assessment") can claim an additional tax credit of $150.
In total, homeowners can claim up to $3,200 in energy-efficient home improvement tax credits each year.
Related Post: What's a Home Energy Audit and When Do I Need One?
Electric Vehicle (EV) Charging Station Tax Credit (Code § 30C)
Thanks to the electric vehicle (EV) charging station tax credit (Code § 30C), owners of alternative fuel vehicles can claim a healthy tax credit when installing charging stations. Starting on January 1, 2023, installing fueling equipment for alternative fuel vehicles — including natural gas, propane, hydrogen, electricity, E85, or diesel fuel blends containing a minimum of 20% biodiesel — can earn homeowners a tax credit of 30% of the cost of the installation project or six percent of the project cost in the event that the property is subject to depreciation.
However, there are limitations. No matter the cost of the installation, homeowners can only claim a maximum of $100,000. Keep in mind that associated costs, like permitting and inspection fees, aren't included in total expenses.
Also, qualifying language from IRS form 8911 makes it seem as though simply using a charging cable that plugs into a 220-volt outlet won’t qualify. According to the form, qualified alternative fuel refueling equipment is any property used to:
…recharge an electric vehicle, but only if the recharging property is located at the point where the vehicle is recharged.
In other words, a charging station must be a permanent fixture at the location where your EV is charged, not something removable like a charging cable. Additional (verbatim) qualifying language from form 8911 notes that to qualify for the credit, your charging station must meet the following conditions:
You placed the refueling property in service during your tax year.
The original use of the property began with you.
The property isn’t used predominantly outside the United States.
If the property isn’t business/investment-use property, the property must be installed on property used as your main home.
More Ways to Save
While the federal government provides plenty of opportunities to recoup some costs of energy-efficiency improvement projects, they're certainly not the only institution to do so. Many state and even municipal governments offer tax credits and incentives for renewable and energy efficiency, as do some utility providers and even manufacturers.
To get a full picture of the savings available to you today, login to Green Door and head to the Rebates Finder feature. Rebates Finder gathers rebates and tax credits available in your area. Each comes with details on eligibility criteria and links to apply. You can search by a different location, filter by product type and program, and pin your favorites to use later. As rebates come online under IRA, Rebates Finder will automatically update, so you’ll always have the the most up-to-date picture of your savings.