For homeowners considering a few eco-friendly upgrades, this is an exciting time. The recently passed Inflation Reduction Act outlines a number of tax credits and rebates aimed at saving you money as you green up your act.
Homeowners can get up to $14,000 in incentives for electrification and energy efficiency projects. And these upgrades can yield serious savings in other ways. Some estimate that households going fully electric can save, on average, $1,800 per year on their energy bills.
Here at GreatBuildz, a free service that connects homeowners in Los Angeles, Orange County, Ventura & San Diego with reliable general contractors, we get inquiries every day about energy efficiency remodeling projects – here are some key points you need to know about the Inflation Reduction Act, as well as what projects you might want to consider.
Which home-improvement projects qualify for tax breaks and rebates?
A number of factors will affect how much you get back, including your location, income bracket, tax filing, and the number of people living in your household. To find out how much you can expect to see in tax credits and rebates, the nonprofit Rewiring America has created a savings calculator.
It’s also worth noting that only a handful of projects — rooftop solar installation, geothermal heating installation, and community solar subscription — taken on in 2022 will qualify for tax credits. To reap the greatest rewards, you’ll want to wait until next year to start your home improvement projects.
Still, we anticipate an uptick in activity surrounding these eco-friendly opportunities, and now is a great time to speak with a licensed general contractor about which projects will best suit your household’s needs. Here are a few ideas to get you started.
Everyone loves a kitchen remodel, and now there’s even more to love. Energy-efficient appliances like electric stoves and ovens — which can make up a significant percentage of your total renovation costs — are eligible for up to $840 per appliance in direct consumer rebates.
Updating your laundry room? An electric heat pump clothes dryer also is eligible for that $840 rebate.
And even if now is not the time to replace all of your appliances, you can still make plans and prepare for when you’re ready. One recommendation is to make note of how old each appliance is and jot down plans for what you’ll need to do as it nears the end of its life. For example, will you need to have new outlets installed to accommodate electric appliances in the future?
Cooling and Heating
Air conditioning is a must in the Los Angeles area, and a heat pump air conditioner and heater are eligible for up to $8,000 in rebates from the Inflation Reduction Act.
Of course, you don’t want all that cool air escaping your home. Luckily, there’s a tax credit to cover the cost of a home energy audit, up to $140. The audit will identify areas you can increase efficiency through weathering projects, and many of these are eligible for incentives as well. For example, you can get up to $1,600 back on insulation or air-duct sealing, $600 back on energy-efficient windows and skylights, and $500 for exterior doors. And you won’t just save money on the project itself. According to the EPA, weathering upgrades like these can slash your utility bills by at least $350 annually.
Meanwhile, energy-efficient heat pumps or heat pump water heaters can qualify for 30% of the total cost in tax credits, up to $2,000.
Home Energy Systems
If you’re replacing a number of gas-powered appliances or a heater with electric units, it might also be necessary to upgrade your electrical infrastructure. A new electrical panel can qualify for a $600 tax credit, and you can get an additional $2,500 discount for wiring work.
Meanwhile, rooftop solar panel installations are eligible for a 30% federal tax credit. Given that the average residential solar electric system costs between $15,000 and $25,000, this amounts to huge savings. It’s worth noting that the rebate also includes battery storage technology, which stores excess power until you need it, and you can claim credits on a secondary residence as well.
Electric vehicle charging
The Inflation Reduction Act revamped its tax credit program for EV purchases, which means many homeowners might be exploring home vehicle charging options. Starting next year, you can receive a 30% credit up to $1,000 when you purchase and install charging equipment. This includes bidirectional chargers, which allow you to charge your EVs battery and then discharge electricity from the battery back to the electric grid.
Additional energy rebates from the Inflation Reduction Act
In addition to offering tax credits and rebates on home-improvement projects, the Inflation Reduction Act also extends energy rebates to households that significantly decrease their home energy use through efficiency retrofits. There’s no prohibition between the homeowner tax incentives outlined above and the rebate program, so you can qualify for both. Homeowners who cut their energy usage by 20% can receive a maximum rebate of $2,000 or half the cost of the retrofit, whichever is less. Those who cut their energy use by at least 35% could qualify for a rebate of $4,000.
How to find the best general contractor for your green home-improvement project
When you’re planning eco-friendly projects for your home, you want to ensure you’re optimizing the performance of each upgrade. That’s why it’s important to work with an experienced general contractor who understands all the ins and outs of this type of work.
At GreatBuildz, we’ve made it easy to connect with Los Angeles’s best. Just give us a call and tell us about your project. We’ll then match you with three contractors specializing in the types of projects you’re pursuing, whether it’s kitchen renovations, solar panel installation, HVAC and ductwork, or garage remodels. We’ve vetted every contractor in our network, so you can rest easy knowing that each one is licensed, insured, and has a track record of success.