The Biggest Climate Incentive Bill That No One’s Heard of Is Trying to Put Money in Your Pocket
Confused about how to get climate money through the Inflation Reduction Act?
You’re not alone. Allow us to break it down for you.
Before we dive deep on the Inflation Reduction Act (IRA), we need to get one thing out of the way:
This is a terrible name for a landmark piece of legislation that includes $369 billion in funding to tackle climate change. It undersells the law’s far-reaching, generational impact. It’s like if George Lucas had used the title “People + Spaceships” instead of “Star Wars.”
With a name so uninspiring, it’s no surprise that 57% of American voters say have either heard “a little” or “nothing at all” about the IRA. Interestingly enough, 68% of registered voters say they support the law after learning a little bit about it.
Let’s dive into the IRA and cover specific ways you can save money through its rebates and tax breaks—and see why so many people like it once they learn more about it!
A quick overview of the Inflation Reduction Act
The IRA was signed into law in August 2022 and is widely considered the largest action that the American government has ever taken to address climate change. In fact, it’s projected to reduce U.S. carbon pollution by 40% by 2030 (compared to 2005 levels) according to the U.S. Office of Management and Budget.
The name Inflation Reduction Act undersells the law’s far-reaching, generational impact. It’s like if George Lucas had used the title “People + Spaceships” instead of “Star Wars.”
One big way the IRA will help reduce emissions is by helping you qualify for more than $10,000 in tax credits and rebates. We’ll wait while you pick your jaw up from the floor. Yes. The government will pay you to help the environment.
Want to find out how much you might qualify for? The fantastic folks over at Rewiring America put together this handy dandy calculator to tell you just that.
How is IRA money paid out?
Before we get into the ways you can save money because of the IRA, it’s important to understand exactly how the IRA gets you paid.
The answer? A mixture of tax credits and rebates. Here’s the difference:
Tax credits reduce the amount of income tax you’d otherwise need to pay at tax time. For example if you owe $1,500 in federal income taxes at the end of the year, but you claimed a $1,000 tax credit for energy efficient equipment, you now only owe $500.
Tax rebates are more immediate discounts that give you cash back after you make a purchase. Sometimes you might get your rebate at the time of your purchase. Rebates, unlike tax credits, don’t rely on income levels.
Another thing to remember is that your savings don’t stop after you claim your tax credits or rebates. All of the actions we’ll walk through below will help lower your bills in the future while helping the climate!
Our favorite IRA money makers and environment savers
From electric vehicles to home weatherization and everything in between, the Inflation Reduction Act has a LOT of different rebates and tax credits. So, to cut out the noise, here are some of our favorite—and most accessible—ways to earn IRA tax credits and rebates.
Get a home energy audit.
Total value: $150+
Type: Tax credit
The IRA offers a partial tax credit for home energy audits. A home energy audit is a room by room walkthrough to evaluate your home’s energy use completed by a licensed professional. It helps you identify where your house is losing energy, what you can do to save money on your bills, and how to best make energy efficient upgrades.
Weatherize, air seal, and insulate your home.
Total value: $2,800
Type: Credits and Rebates
Windows can be responsible for up to 30% of heating and cooling energy use. Insulating your home can lower heating and cooling costs by up to 20%. Credits and rebates to perform these changes on your home are partially tied to income, but most people can qualify!
Get an energy-efficient stove.
Total value: $840
Type: Rebate
Electric stoves provide better energy efficiency and indoor air quality than gas stoves. That means you can save money and keep unhealthy pollution out of of your home. Whether or not you qualify will depend on your income, location, and whether or not you own your home.
Upgrade your dryer.
Total value: $840+
Type: Rebate
Modern heat-pump clothes dryers are an energy-efficient alternative to traditional dryers. They take a bit longer to dry clothes but only use about half the electricity! Everyone qualifies for this rebate and low-income households could receive up to 100% of their money back!
Get a better breaker box.
Total value: $6,500+
Type: Rebate
A breaker box (aka electrical panel) is how electricity flows through your home. New panels can save up to 30% on your monthly electrical use. Low-income households can get a $4,000 rebate for panels and $2,500 for wiring. Higher annual incomes per household can still get a 30% tax credit, up to $600 a year.
Install solar panels.
Total value: 30% of purchase
Type: Tax credit
Though the price of rooftop solar has dropped more than 70% in the past decade, it still costs about $20,000 on average to install. The new IRA tax credit covers up to 30% of qualifying purchase price and can also cover the cost of labor, permits, and inspection.
Buy a new or used electric vehicle.
Total value: $7,500 for new EVs, $4,000 for used EVs
Type: Tax credit
EVs in the U.S. emit about a third of the greenhouse gases of gas-guzzling cars. The IRA recognizes that by offering a tax credit of up to $7,500 on eligible new EVs and $4,000 (or 30 percent, whichever is lower) on used EVs (of a total cost up to $25,000).
How to cash in on the Inflation Reduction Act
If you’ve made it this far, we’re guessing your gears are spinning. Thanks to the new federal climate incentives, its never been easier or more financially accessible for everyday folks like you to make your lifestyle more environmentally friendly.
With your environmental and economic interests aligned, now’s the perfect time to cash in.
Your next steps? Dive deeper into the best rebates and tax credits from the Inflation Reduction Act and learn how to get them in the Dashboard.Earth (beta) app.