Incentives under the Inflation Reduction Act for Home Energy Efficiency
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What is the Inflation Reduction Act?
The Inflation Reduction Act (IRA) is a federal law that provides roughly $370 billion for national investments in clean energy and energy efficiency, including programs to help households and taxpayers upgrade their homes to save money and reduce energy use. By reducing our energy consumption and expanding clean energy sources, these investments will make our air cleaner and help meet the District’s goal of carbon neutrality by 2045.
Rebates for Residents to Improve Home Energy Efficiency
The IRA created two rebate programs under the federal Department of Energy to assist households with energy-efficient home upgrades. The Home Efficiency Rebates program will provide incentives for whole-home energy savings upgrades, while the Home Electrification and Appliance Rebates program will provide incentives to consumers for certain high-efficiency electric appliances and energy efficiency products. DOEE is applying for funding from the Department of Energy to develop and implement the IRA rebates programs in the District. DOEE plans to use this funding to expand existing low-income programs that reduce energy use in homes through energy efficiency upgrades and that help households transition from gas-powered appliances to electric ones.
Rebates from the Inflation Reduction Act are not currently available.
The federal government issued program requirements and application instructions for states to request funding for programs that deliver home energy rebates to building owners and residents. DOEE will develop and submit applications to request the nearly $60 million allotted to DC.
Are there other sources of support for electrification and efficiency that are available now?
The DC Sustainable Energy Utility (DCSEU) offers other incentives for home energy efficiency and electrification. DCSEU’s Affordable Home Electrification Program can help income eligible households make the switch from natural gas and electrify their home heating and water heating systems. DCSEU’s Appliance Rebates – distinct from the IRA rebates – are available to District residents who want to upgrade appliances in their homes.
The District also offers other forms of assistance to residents and homeowners to reduce energy use and save money on utilities. Additional information can be found on frontdoor.dc.gov.
Tax Credits for Home Energy Efficiency
The Inflation Reduction Act extended some tax credits and created new ones to help households with energy-efficient home upgrades. Tax credits are available now and are managed by the Internal Revenue Service (IRS). Taxpayers must claim credits when filing their annual federal tax return.
Information about tax credits can be found at the following links. Please consult a financial or tax advisor for further assistance.
Frequently Asked Questions
What is the difference between a rebate and a tax credit?
A tax credit is a dollar-for-dollar reduction in the amount of federal income tax paid. That is, a tax credit can reduce the amount of taxes owed or can increase your tax refund. Taxpayers must claim credits when filing their annual tax return with the Internal Revenue Service. DOEE does not have a role in administering tax credits. Please consult a financial or tax advisor for further information on claiming tax credits on your return.
A rebate is a discount associated with the purchase of a specific product or service and can occur either as a point-of-sale discount or as a partial or full refund after proof of purchase is submitted. DOEE will be managing and overseeing the distribution of IRA rebates within the District.
Am I eligible for a tax credit for an appliance that I've already purchased or an upgrade I’ve already made to my home?
Many of the tax credits extended or created under IRA are effective starting in calendar year 2023. Please consult a financial or tax advisor for further information about claiming a tax credit on your annual tax return for a past purchase.
Am I eligible for an IRA rebate for an appliance I’ve already purchased or an upgrade I’ve already made to my home?
DOEE expects that rebates will not be available for purchases or upgrades made prior to the District’s program launch.
What is electrification?
Electrification involves replacing home appliances and systems that burn fossil fuels with appliances and systems that are powered by electricity; for example, replacing a gas stove with an induction stove, or a gas-powered furnace with a heat pump for home heating and cooling. Electrification can help reduce harmful greenhouse gas emissions that cause climate change.
