By Brenda Shufelt
Over the years my wife Lynda and I have been proactive about energy efficiency in our 1875 farmhouse: using passive solar, putting insulation in whenever we renovated down to the hand-hewn beams and wooden pegs (since there was NO insulation!), installing new windows and doors, and purchasing a new oil furnace. We have always realized savings from these efforts (our furnace, as predicted, paid itself off in 8 years!) And, now that there are unprecedented government incentives to help offset the costs, we are ready for bigger and more substantial energy efficient improvements.
The Inflation Reduction Act (IRA), signed into law August 16, 2022, is geared toward developing clean energy in our country, strengthening supply chains for the clean energy industry, and employing American workers. A big component of the bill is tax credit for residents and businesses who take steps toward greener energy use. When I first heard this, my ears perked right up (as they say). We have wanted to install solar panels for a while and, more recently, heat pumps, but were put off by the costs.
Very selfishly, this article is my chance to research what the government is offering that might soften the blow in the short term as we save money on energy costs in the long term. So, let me try to give you the 411 on the 911 matter of reducing energy consumption. With the added benefits of tax credits it’s a win-win.
I thought this research would be difficult and time-consuming but then I saw an Instagram Story from Congresswomen Alexandria Ocasio-Cortez (AOC) with the O’Jays’ “For the Love of Money” as the background audio and this link: https://www.whitehouse.gov/cleanenergy/
So cool and easy to navigate. It actually has a diagram of a house with links (the blue buttons) to each part for which the IRA has some monetary incentive for making your home greener!
Here is a list of some of the benefits (I’ve include state benefits when applicable):
Federal tax credit - https://www.energy.gov/eere/solar/homeowners-guide-federal-tax-credit-solar-photovoltaics - This credit applies to solar systems that are paired with battery storage as well as standalone battery storage installed without solar. Solar photovoltaic systems installed 2022-2032 receive a 30% tax credit on the cost with no maximum amount. This includes solar PV panels & cells, labor for onsite preparation, assembly, installation, permit fees and inspection costs, energy storage devices, and sales tax. (https://www.energy.gov/eere/solar/homeowners-guide-federal-tax-credit-solar-photovoltaics)
NYS personal tax credit - https://programs.dsireusa.org/system/program/detail/80/residential-solar-tax-credit - 25% tax credit for solar-electric (PV) and solar-thermal systems up to $5,000.
Rebates and tax credits from NYS do not generally affect the federal tax credit but, remember, it affects how much state tax you can deduct on your federal tax income since you are paying less state tax.
Federal tax credit - Households can claim a tax credit for 30% of the costs of buying and installing a heat pump, up to $2,000, including support for any electric system upgrades needed to make the home heat-pump-ready. In addition, state programs offer low- and moderate-income households rebates for heat pumps at the point-of-sale, cutting costs of purchase and installation up to $8,000. If home electrical upgrades are needed to integrate new heat pumps, rebates of up to $4,000 are available to households.
NYS tax rebate - Rebates for heat pumps and heat pump water heaters are offered through NYSEG in our area. In addition, NYS ENERGY STAR offers an income-dependent discount covering 50% of the cost of eligible energy efficiency improvements up to $5,000 per project for single-family homes.
See also Katy Flammia’s “The Beauty of Heat Pumps” from the April/May ‘23 newsletter: https://www.climatesmartclaverack.com/post/the-beauty-of-heat-pumps
Weatherization and other energy efficient options:
Households can access a tax credit to cover up to 30% of the costs for efficiency improvements with up to $1,200 in credit each year for adding insulation or installing efficient windows and doors. And there is a special credit of as much as $2,000 for electric heat pumps that provide super-efficient heating and cooling.
Families can claim a credit of up to $150 for a home energy audit to get them started.
In addition, state programs will offer rebates for electric appliances and home retrofits, which will reduce household energy bills each month. All households can access rebates of up to $4,000, while low-income households could receive up to $8,000 for home efficiency. Low- and moderate-income households can access rebates covering up to 100% of the costs of installing electric appliances like heat pump water heaters and clothes dryers.
The IRA includes tax credits and rebates to upgrade a home’s breaker box or electrical wiring.
From what I understand, the businesses that deal with solar panel and heat pump installs are very well-versed on all of these incentives and will be able to give you information and even participate in the process.
I’ll share one final resource, a very local one, that may be able to help you tie everything together. And, as I learned on Instagram (of course) you can always reach out to our local Cornell Cooperative Extension for assistance. Recently, Michael Chameides, who serves on the Columbia County Board of Supervisors, representing the 3rd Ward of Hudson, had the following post:
Here’s to “greening” your home, our planet … and your bank account! Let us know how you do!