All the Home Improvement Tax Credits You Can Take Advantage of This Year
President Biden signed the Inflation Reduction Act (IRA) into law last August, but it wasn’t until January 1 that Americans became eligible for money-saving tax credits for green home improvements, appliances, and electric cars . Now that the new year has arrived, let’s take a look at what an IRA could mean for your next home renovation.
What does the Inflation Reduction Act have to do with home renovations?
Figuring out what actually went into the final version of the Inflation Reduction Act is a little confusing because some big changes were made at the last minute. What you really need to know is that this includes direct savings for households that make home improvements in terms of cost and energy.
You can receive up to 30% tax credits on energy efficient home improvements, including heat pumps, as well as rebates on home retrofits, electrification projects and related upgrades. You can also get up to 30% tax breaks on things like rooftop solar, batteries, geothermal heat pumps, and more. ( For more on available tax credits for new and used eco-friendly vehicles, see here .)
What is suitable?
The IRA provides money for the following:
- Solar energy on the roof
- Energy saving appliances such as dryers, stoves and ovens
- Heat pumps
- Electrical panels and wiring
- Programs that cover the cost of insulation and insulation
If you choose to make some home improvements this year — and frankly, you should if you can — you’ll either save money through tax credits coming next year or upfront discounts. Credits are valid until 2032, and some discounts may not be available for several more months. Each state has its own guidelines on who qualifies for what, so check this map for your region’s specific requirements. The IRS also has a website offering guidelines that should be updated throughout the year.
Where to begin
If you read this and thought, “Damn, I could buy a solar panel on the roof” or “Let me buy an energy efficient stove,” the good news is, the White House has a guide on how to actually get these loans. Whichever project you are considering, you must ensure that the tax credits will apply. You can then find detailed information about the next steps by finding your project in this list .
As an example, let’s say you need a new energy efficient dryer. According to the White House, you can get a tax credit to cover up to 30% of your expenses. You can even get a loan of up to $150 to cover a professional home energy audit to determine exactly what you need to change to make your home more efficient. All households are eligible for discounts of up to $4,000, and low-income households can receive up to $8,000. Low- and middle-income households are even eligible for discounts that can cover up to 100% of the cost of installing new electrical appliances.