Commentary by Jim Grimes
Just seven more years. By 2030, the world, and by extension the United States, must reduce its greenhouse gas emissions by half to avoid the worst calamities associated with climate change. The timetable is short, and the 2022 Inflation Reduction Act is helping U.S. businesses and households reach the 2030 goal by reducing the upfront costs for transitioning to clean energy.
The majority of IRA funding available to households is in the form of tax credits for which all households qualify. IRA tax credits can be used to install solar panels and batteries (30 percent), switch to an electric vehicle (up to $7,500 new, $4,000 used), convert a gas furnace to an electric heat pump (up to $2,000), and weatherize your home (up to $1,200), among other upgrades. You purchase the item and then file for a credit on the same year’s tax return. For solar panel and battery purchases, households can rollover unused tax credits year over year.
By the end of 2023, low and moderate-income households will be eligible for point-of-sale rebates (up to $14,000) for qualified residential electrification upgrades. Rebates make more sense for these households because they can least afford the upfront costs and they don’t have the tax liability required to offset a tax credit.
The easiest way to determine what tax credits and rebates are available to your household is to use the Rewiring America IRA Savings Calculator at rewiringamerica.org/app/ira-calculator. Enter a few pieces of information, and the calculator will show you the dollar amounts of rebates and tax credits for which you qualify. Limits apply, so be sure to check out the IRA fact sheets at rewiringamerica.org/ira-fact-sheets.
There has never been a better time than now to begin the journey of cutting your carbon footprint in half by 2030.
In Part 3 of this series, I will discuss the need for a multi-year plan, using available IRA funds over time, to electrify everything.
Jim Grimes is a Carmel Green Initiative board member. For more information, visit carmelgreen.org.
