Do I need to spend a lot to get these incentives?
In many cases, no! The IRA’s incentives are designed to increase access to clean technology. For households with lower incomes, 100% of appliance and installation costs are discounted at purchase, meaning you could install efficient electric appliances at no cost, with no spending.
Middle-income households do have to spend in order to access savings, but up to 50% of appliance and installation costs can be covered through upfront discounts, and you can use tax credits to cover some of the remaining gap.
Highest income households are not eligible for upfront discounts, so you will have to pay full price for appliances and installation — but tax credits on the back end could recoup around 30% of your costs.
Can the IRA help me if I’m a renter?
Yes! The IRA’s up-front electrification rebates and electrification tax credits can all be used by renters. Many of these upgrades (including window-unit heat pumps, electric stoves, and heat pump clothes dryers) are portable, so renters can bring them to their next homes and won’t have to leave any savings behind. Renters are also eligible for the used and new EV tax credits. And although they’re not exactly consumer-facing, renters will benefit from the IRA’s $1 billion investment in affordable housing energy upgrades and the new tax deduction for efficiency upgrades in commercial buildings (including apartment buildings).
Renters can also subscribe to community solar — which will be cheaper because of the IRA’s supply-side renewable energy incentives.
When can I access the IRA’s incentives?
Some incentives are available now, and others will become available in 2023. The tax credits marked “2023” will be available on January 1, 2023. Unfortunately we don't know exactly when the upfront discounts marked “2023” will be available, because it will depend on how each state rolls out its incentive program. Our best guess is that those upfront discounts will be available mid-end of the year 2023. For an overview of incentives you can use right now, see the FAQ: "Are there tax credits I can use right now if I don’t want to wait till next year?"
Who should I include in my household?
You should include anyone that you claim as a dependent on your taxes. That could be children, grandparents, or other relatives who you support financially. You should also include your spouse or domestic partner if you file taxes together.
Whose income should I include in my household?
If you are married, you should include your spouse's income. If you claim any dependents with income on your taxes, you should include their income, too. If you receive child support, social security income, or other types of non-taxable income, include those too.
How does my income determine which incentives I get?
The Inflation Reduction Act includes over $61 billion for disadvantaged communities. Our calculator uses your income and zip code to figure out if you qualify. You can read more about these programs in our report.
How the incentives work
How will upfront discounts work?
When you buy and install a new appliance, the discount will be taken right off the bill from the manufacturer or your contractor.
How will my income be verified for the incentives?
We don’t yet know how your income will be verified. Federal and state agencies will release guidelines over the next few months, and we’ll update this page once we know more.
Are there tax credits I can use right now if I don’t want to wait till next year?
Yes, there are! While our calculator highlights the Inflation Reduction Act’s new provisions (many of which start next year), here are some provisions you can utilize right now:
- Electric vehicles: the current EV tax credit ($7,500, with a per-manufacturer unit cap of 200,000) will remain in place through 2022, until it is replaced with the IRA’s version on our calculator. However, the IRA did put in place a final assembly requirement that affects the old tax credit.
- Electric vehicle chargers: the IRA extends the old EV charger tax credit (30% up to $1,000) through 2022, until it is replaced with the new version on our calculator.
- Heat pumps: the current 25C tax credit (10% up to $300) will remain in place through 2022, until it is replaced with the IRA’s version on our calculator.
- Rooftop solar: the IRA’s new 25D tax credit (30%, uncapped) is retroactive to all of 2022 — so you don’t have to wait till next year!
Do the rebates and tax credits cover installation costs as well as purchase costs?
If I already have an electric appliance, am I eligible for HEEHRA rebates?
No. HEEHRA rebates only apply if you’re replacing a non-electric appliance (i.e., replacing an oil boiler with a heat pump or replacing a gas stove with an electric one). Unfortunately, this means that households with inefficient electric resistance heating cannot receive HEEHRA rebates for a heat pump.
How do the Whole Home Energy Reduction Rebates work?
The Whole Home Energy Reduction Rebates are designed to incentivize improvements in household energy efficiency. Like the HEEHRA rebates, implementation details will be determined by guidance from the Department of Energy and program proposals from State Energy Offices.
How the calculator works
Do you sell any of my personal data?
No, we do not. As of November 1st, we are now collecting the calculator inputs, including zip code and household information. We will only use this data in aggregate and anonymized to help us better understand who is interested in the IRA incentives, and help us build lists of qualified contractors for certain zip codes. We also store the inputs in local storage inside your web browser to improve the user experience.
How is this calculator estimating taxes?
The United States taxes income progressively, meaning that how much you make will place you within one of seven federal tax brackets. It also takes into account whether you are single, jointly file as a married couple or are considered a head of household. Once we have calculated federal taxes owed, we apply the non-itemized standard deduction of $12,550 that all Americans are eligible for.
How did you choose specific rebates for renters?
For renters, we’re highlighting incentives for portable appliances, so you won’t have to leave the appliances or any potential savings behind. These portable appliances include window-unit heat pumps, electric stoves, and heat pump clothes dryers, as well as electric vehicles.
How do you calculate eligibility for HEEHRA upfront discounts?
The Department of Housing and Human Development (HUD) calculates the Area Median Income for every census tract, and is available here. Eligibility for HEEHRA point-of-sale rebates is based on your household income in relationship to your Area Median Income. If you are household income is below 80% of AMI, you are eligible for the maximum point-of-sale rebates. If you are between 80% and 150% of AMI, you are eligible for up to 50% of appliance and installation costs through point-of-sale rebates, and you can use tax credits to cover some of the remaining gap. In both cases, the maximum discount is $14,000.
HUD calculates the 80% AMI for households between 1-8. HUD applies exceptions and adjustments for many geographic areas that do not make the math simple and straightforward. “There are many exceptions to the arithmetic calculation of income limits. These include adjustments for high housing cost relative to income, the application of state nonmetropolitan income limits in low-income areas, and national maximums in high-income areas.” (HUD FAQ) Depending on your inputted household size, we will look up the appropriate 80% AMI for your zip code. HUD does not calculate 100% AMI or 150% AMI for us, so we have calculated that number ourselves based on the 80% AMI numbers.
Exceptions and adjustments are detailed in the FY 2022 Income Limits Methodology Document.
What is the difference between HUD’s Median Family Income (MFI) and Area Median Income (AMI)?
“HUD estimates Median Family Income (MFI) annually for each metropolitan area and non-metropolitan county. The metropolitan area definitions are the same ones HUD uses for Fair Market Rents (except where statute requires a different configuration). HUD calculates Income Limits as a function of the area's Median Family Income (MFI). The basis for HUD’s median family incomes is data from the American Community Survey, table B19113 - MEDIAN FAMILY INCOME IN THE PAST 12 MONTHS.
The term Area Median Income is the term used more generally in the affordable housing industry. If the term Area Median Income (AMI) is used in an unqualified manner, this reference is synonymous with HUD's MFI. However, if the term AMI is qualified in some way - generally percentages of AMI, or AMI adjusted for family size, then this is a reference to HUD's income limits, which are calculated as percentages of median incomes and include adjustments for families of different sizes.”
Electrifying your home
Where can I learn more about these appliances?
We created a handy guide with everything you need to know about electric appliances. You can download it here.
I want to start electrifying my home! What should I do first?
We created a handy guide with all the steps to electrify your home. You can download it here.
What is a tax credit?
A tax credit is a provision that reduces a taxpayer's final tax bill, dollar-for-dollar. A tax credit differs from deductions and exemptions, which reduce taxable income, rather than the taxpayer's actual, final bill.
What is a tax deduction?
A tax deduction is a provision that reduces taxable income.
What is a carryforward tax credit?
This means that if you do not use the full tax credit in one year, you can carry it forward to reduce your tax liability for the following year