What we know (and don't know) about the Inflation Reduction Act

November 3, 2022
Inflation Reduction Act in Vermont

By Brian Gray

Homeowners are eagerly awaiting new programs and incentives included in the Inflation Reduction Act (IRA) which was signed into law in August of 2022.

The IRA includes $370 billion for initiatives aimed at improving the environment and helping homeowners reduce their fuel burden. It is the biggest investment our government has ever made to fight climate change and is projected to reduce US greenhouse gas emissions 40% by 2030

As of this writing, we don't know all the details of how this legislation will affect homeowners in the State of Vermont, but we do know that this law will make energy improvements more affordable and encourage our transition to electrification and away from expensive fossil fuels.

Here are some program highlights:

Residential Tax Credits are being extended and increased: Known as the 25C Tax Credit, this offers homeowners a tax credit for energy efficiency upgrades.

  • In 2023, tax credit increases to 30% of total installation costs through 2032
  • Lifetime cap of $500 will be replaced by cap of $600 per measure, with $1,200 annual total limit (exceptions listed below)
  • Eligible services and home improvements include:
    • Heat pumps and heat pump water heaters ($2,000 credit)
    • Insulation and air sealing
    • Energy audits ($150 credit)
    • Energy-efficient HVAC systems (including furnaces, boilers, and central AC)
    • Electrical panel upgrades
    • Energy-efficient windows and doors ($500 credit for doors)
    • Roofs are no longer eligible

Rebate Program - $4.5 Billion is being allocated for rebates for low and moderate-income homeowners for electric system/appliance purchases and energy efficiency upgrades.

  • Maximum rebate of $14,000 per household; individual rebates are as follows:

Homes Rebate program – Allocates $4.3 Billion in rebates for home efficiency weatherization improvements.

  • Homes with energy reductions of at least 20% are eligible for a maximum rebate of $2000
  • Homes with energy reductions of 35% are eligible for a maximum rebate of $4000
  • Rebates are double for lower income households (80% of the local median income)

How much is my rebate?

This is one of the most frequently asked questions from our members and customers when considering an energy upgrade.

To help break down your options, Rewiring America has installed a helpful tool which gives you a quick reference for eligible incentives and rebates based on your location, income and desired upgrade. This tool will also keep you updated on when these programs become available (most of them will be in 2023).

As always, the team at the Energy Co-op is happy to answer questions about your home and the upgrades you may be considering. We are looking forward to helping Vermont homeowners take advantage of these programs and incentives to help achieve a cleaner environment for the planet and a more comfortable and healthy home.