What the IRA Home Energy Rebates Mean for YOU
By Ruby Ranoa, Earth Forward Group
Published May 20, 2024. Updated September 18, 2024.
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Map of states who have applied for federal home energy rebates program funding, as of September 18, 2024 (Image Source)
The Inflation Reduction Act (IRA) of 2022 allocated nearly $9 billion for consumer home energy rebate programs, designed to help homeowners reduce the upfront cost of implementing energy-saving measures. These initiatives aim to promote the adoption of energy efficient technologies and weatherization strategies, ultimately empowering residents to reduce their energy consumption and lower their energy bills.
These home energy rebate programs will be developed and administered by the state energy offices and tribal governments that secure federal funding. As of April 2024, New York has become the first and only state to receive funding and currently has an active program approved through 2032. DOE has announced that 11 other states have submitted federal funding applications. Check your state’s application status here.
The earliest programs are expected to roll out by the end of the year, with many other states expected to follow in 2025 and beyond.
A heat pump, an energy-efficient alternative to traditional HVAC systems
Each state will launch two major rebate programs:
Home Efficiency Rebates (HOMES)
Target Audience: Anyone looking to implement a comprehensive set of measures to reduce energy usage by at least 20%, especially low-income households.
Home Efficiency Rebates can potentially save you up to $8,000 on whole house energy-efficiency upgrades in your single-family or multi-family home, depending on your household income and the project’s energy savings. The federal program does not specify what upgrades are eligible, but instead provides rebates for various combinations of energy-efficient product and building material installations that reduce at least 20% of your home energy usage. Your State Energy Office will define which specific products and building materials will be eligible for your home upgrades when your state’s HOMES program launches. Additionally, the DOE requires that any space heating and cooling appliances and water heaters must be ENERGY STAR certified at time of installation.
While there are no federal income restrictions to qualify, a portion of funding is reserved for low-income households, which will qualify for greater rebate amounts. However, states themselves may set their own income restrictions when they launch their HOMES program.
Home Electrification and Appliance Rebates (HEEHRA)
Target Audience: Low- to moderate-income households looking to purchase high-efficiency electric home appliances.
Home Electrification and Appliance Rebates will provide up to $14,000 per household to reduce the cost of high-efficiency electric home appliances and installations such as heat pumps, electric cooktops, and related electric wiring. These rebates will be at the point-of-sale, acting as an immediate discount when you’re purchasing appliances at hardware stores such as Home Depot or Lowes, which means you don’t have to wait for the tax credit to get your money back. Low-income households may receive up to 100% of cost coverage, while moderate-income households may receive up to 50% of cost coverage.
To qualify as a low-income household, your total household income must be less than 80% of your Area Median Income (AMI). To qualify as a moderate-income household, your total household income must be between 80% to 150% of your AMI. You can check your AMI with this tool. Using the town of Woodbridge, Connecticut as an example, a low-income household under this program would have to be making less than $92,880, and a moderate-income household under this program would have to be making between $92,880 and $174,150, as of May 2024. However, states themselves may set their own more restrictive income restrictions when they launch their program.
An electric cooktop, an appliance whose purchase and installation is eligible for rebates under HEEHRA
The eligibility of specific equipment, appliances, and improvements will be determined by your state or tribal government, so it is important to consult your appropriate governmental authority before making purchases. For further information about your state’s home energy rebate programs, visit this link.
It’s important to note that each upgrade only qualifies for one IRA rebate program at a time. Even if your household is simultaneously eligible for the HOMES and HEEHRA programs in your state, you can not stack rebates for the same energy efficiency upgrade. For example, you cannot use HEEHRA to purchase an energy-saving appliance, and then use that appliance in your calculation of 20% energy savings to qualify for HOMES rebates. However, your household can receive rebates from both programs if they are used for completely separate upgrades. For example, you can use the HEEHRA program to purchase an energy-saving appliance, and use the HOMES program to separately install a set of weatherization measures that results in at least 20% household energy savings.
An infrared camera, a tool commonly used during professional home energy audits
Want to take advantage of these home energy rebates? Here’s your step-by-step guide:
Assess your home’s energy use with an energy audit
Consider scheduling a professional home energy audit to detect where your major energy losses are. The auditor will also provide recommendations of the most effective energy efficiency measures to implement in your household. Check the RESNET website for HERS Certified energy auditors in your state. Additionally, research home energy audit or energy assessment programs in your city, county, and/or state, as many areas offer free or reduced cost services and/or state tax credits. You may also be eligible for a 30% federal tax credit for purchased services, for up to $150. To learn more about energy audits and for guidance on how to do them yourself, see this U.S. Department of Energy article.
Research your available rebate program(s)
To check the status of your state’s rebate programs, find your state on this map. If your state has not launched their rebate programs yet, be sure to subscribe to your state’s home energy rebate and/or state Energy Office website to get the most up to date information. For those living on tribal lands, the federal application for tribal governments is still being developed as of April 2024.
Once your state or tribal government has launched, confirm your eligibility for each rebate program, including household income level, specific eligible appliances and projects, and any other additional state or tribe-specific requirements. Note that your state or tribe may have more stringent qualification requirements than what is required by the IRA.
Plan your energy efficiency upgrades
To plan your energy efficiency upgrades effectively, it's essential to consider several key factors. These should include the following:
Most Effective Measures. Your professional home energy audit will have revealed the most effective energy efficient measures you can take, unique to your home. For example, if the audit reveals significant heat loss through poorly insulated walls, upgrading insulation should be a top priority.
Upgrading vs. Replacement. As not all energy efficiency measures require full replacements, assess which measures you can upgrade instead that still make a big impact on your energy savings. For example, if your energy audit reveals drafts around doors and windows, try improving the sealing rather than replacing the entire frame, which can be much more costly.
Cost-Effective and/or Easy-to-Implement Measures. Consider energy efficiency measures that offer a high return on investment and are relatively easy to implement, such as adding insulation to hot water pipes and sealing leaky ducts.
Your Budget. Evaluate how much rebate funding you are eligible for, what specific appliances and services are covered by your eligible program(s), and how much your household is able to pay.
Implement Energy Efficiency Measures
Since do-it-yourself measures are not covered by these rebate programs, you’ll need to identify eligible local contractors to carry out your energy efficiency projects. Each state’s Energy Office will identify approved home energy contractors for these rebate programs. For more information, find your state’s home energy rebate website here.
As rebate programs are separately managed by state or tribal governments, follow your appropriate governmental body’s process for applying for and obtaining rebates.