Back on August 16, 2022, President Joe Biden signed the landmark Inflation Reduction Act (IRA) into law. The bill broadly aimed to tame the inflation that resulted from the COVID-19 pandemic and its economic disruptions. However, it’s how the law went about doing so that should draw the interest of Minnesotans. The IRA is, in fact, the largest single investment in green energy and energy efficiency in the history of the U.S. Moreover, it contains a variety of provisions that residents here can use to defray the costs of a variety of energy upgrades for their homes. Here are all of the ways that Minnesotans can take advantage of the IRA.
Residential Energy Assessments
If you want to improve your home’s energy efficiency, the first thing you’ll need is a home energy assessment. It’s a process whereby a professional energy auditor will inspect your home and assign it ratings based on its energy efficiency characteristics. This will let you know what areas of your home could benefit the most from upgrades. However, having an energy assessment performed isn’t free, which dissuades plenty of homeowners from getting one.
The good news is that the IRA contains a provision that provides a tax credit of up to 30% of the cost of your energy assessment, up to a maximum of $150. That can help make the costs involved more manageable. Plus, your energy assessment will also help you build a roadmap to take advantage of the IRA’s other provisions. All you need to do to qualify is to make sure you have your energy assessment performed by a company certified by the U.S. Department of Energy to perform the work.
Residential Energy Efficiency Upgrade Tax Credits
The IRA also makes tax credits available for homeowners who perform specific energy efficiency upgrades to their homes. The credits break down into two categories of upgrades, up to a maximum yearly credit of $3,200.
The first category covers upgrades to your home’s air envelope. This includes things like windows, doors, insulation, and electrical upgrades. It also covers the purchase and installation of efficient furnaces, boilers, and central AC systems. In this category, you can claim up to 30% of each upgrade project’s costs, up to a yearly maximum of $1,200.
The second category covers the purchase and installation of heat pumps, heat pump water heaters, and biomass stoves and boilers. For those, you can also claim up to 30% of the cost of each upgrade project, up to a maximum of $2,000 each year.
Residential Energy Efficiency Rebates
The IRA also included a rebate system that can directly subsidize homeowners who embark on energy efficiency upgrade efforts. One of the rebate programs, called Home Efficiency Rebates, or HOMES, will offer direct rebates to mid- and low-income households based on the projected energy savings their upgrades will create. The program, which operates as a federal grant and is administered at the state level, should begin operating in 2024, at which time program administrators will make more details available.
Then, there’s also the Home Electrification and Appliance Rebate, or HEAR program. It’s a point-of-sale rebate program covering the purchase of a variety of hardware needed for electrification projects by mid- and low-income households. Critically, qualifying homes can take advantage of up to $14,000 of such rebates. That should make buying things like energy-efficient electric dryers, stoves, electrical service panels, and a variety of other items substantially cheaper for many Minnesotans.
The HEAR program is especially useful for homeowners who wish to work on the maximum number of qualifying energy upgrades. That’s because adding additional electric appliances could require things like electrical service and wiring upgrades. And since the materials needed for those types of upgrades all fall under the HEAR program, it can substantially lower the costs involved in preparing your home for full electrification.
Residential Solar Power Tax Credits
Although energy efficiency will save you a bundle on your electricity bills, there’s nothing that can reduce those bills like the addition of a residential solar power system. To encourage the installation of such systems, the IRA offers a tax credit worth up to 30% of the cost of installing one. The covered costs include everything from the necessary solar panels to battery storage and installation costs. And when you consider that the average Minnesota homeowner spends about $22,720 on a rooftop solar system, that works out to a tax credit of over $6,800.
New and Used Electric Vehicle Tax Credits
Finally, the IRA contains provisions that should help Minnesotans interested in purchasing electric vehicles. The first way it does this is by providing a tax credit worth 30% of the cost of purchasing and installing an EV fast charger in your home. That will help you to minimize the costs associated with keeping your EV charged up by allowing you to do it at your normal residential electrical rate. And if you’ve also installed a solar power system, your charging costs may be substantially lower than that.
Then, you can also qualify for a credit of up to $7,500 on a new qualifying plug-in or fuel-cell electric vehicle. To take advantage of the credit, all you need to do is purchase an EV that meets the program’s manufacturing specifications and be under specific adjusted gross income (AGI) thresholds. For single filers, the AGI limit is $150,000, for heads of household, it’s $225,000, and for married couples filing jointly, it’s $300,000.
There are also credits available for used electric vehicles, too. For those, you can receive a credit of $4,000 on qualified pre-owned electric vehicles. The program features similar restrictions on your AGI, but they’re a bit more forgiving than the limits for a new vehicle. In this case, single filers must have an AGI of no more than $75,000, heads of household can have an AGI of up to $112,500, and married couples filing jointly can have an AGI of up to $150,000.
Your Residential Electrification and Efficiency Experts
You should know that understanding all of the ways you can leverage the IRA to cut down the costs of upgrading your home’s energy efficiency is only half the battle. You’ll also need a trustworthy electrical contractor to help you carry out your upgrades. Finch Home Solutions is a full-service electrical company servicing Shakopee and the surrounding area that can help you upgrade all of your home’s electrical systems. We handle everything from electrical repairs and installation to service upgrades, EV charger installation, rewiring, and more! Plus, we’re a Better Business Bureau accredited company with a spotless record for customer satisfaction. With over 15 years of experience and expertise on staff, there’s no residential electrical job we can’t handle. We even offer financing options on approved credit so you can fit the costs of your necessary electrical upgrades into your household budget.
So, if you’d like to get started on upgrading your home’s energy efficiency to take advantage of the IRA, call the experts at Finch Home Solutions to discuss a plan today!