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How to use the Inflation Reduction Act to improve your home's energy efficiency


The first month of the new year has many of us in a planning mood. And if you're a homeowner, your plans might include upgrading your house, maybe replacing that drafty front door or that old gas stove. The Inflation Reduction Act of 2022 has a bunch of incentives aimed at helping you make your home more energy efficient. This year and next, a few more incentives will roll out. Kara Saul Rinaldi is the president and CEO of the AnnDyl Policy Group. She's worked on climate and clean energy policy for two decades and joins us now. Welcome to the program.

KARA SAUL RINALDI: Thank you for having me.

RASCOE: So let's start with the Inflation Reduction Act. Like, how are incentives included in that law aimed at getting people to think differently about upgrading existing homes?

RINALDI: So the incentives in the Inflation Reduction Act have a potential to change the way Americans think about energy consumption because they're really wide-ranging. There's both the 25C tax incentives. Those will be tax credits off of your tax bill at the end of the year. And then they also have rebates, and those will help homeowners that also don't have access to the tax credits 'cause they don't have a tax liability. What this does is this gives Americans a chance to upgrade their homes and make their homes more energy efficient, healthier and more climate friendly.

RASCOE: I mean, a lot of people are aware that there are, like, tax credits and deductions for things like if you get some insulation or, you know - or you replace, you know, your gas furnace with the heat pumps. But are there specific things that happen this year that are going to help homeowners out a little bit more?

RINALDI: Right. So the old 25C tax credit was a tax credit that has existed since 2005, and that's the same 25C tax credit we've known. But what has happened differently with that tax incentive in the Inflation Reduction Act is that now it's annual, and it's been increased up to $3,200 a year. So it is significantly higher than it used to be at a lifetime credit of $500. So one thing to know is that if you've done insulation and you've taken advantage of the tax credit or you've upgraded your heater or your boiler, there's still an opportunity for you to do even more and get a deeper retrofit.

The other thing that's happening this year - there's $8.8 billion in rebate programs, and those rebate programs are split across the states. And then they will be - start rolling those out to homeowners. And homeowners will be able to apply for funding to upgrade their heat pump, electric wiring or looking at their whole home as a system and seeing, how can we upgrade the efficiency of the home using the performance-based rebates? - 'cause there's two different rebate programs.

RASCOE: Let's talk about the rebates because, you know, I have an older home, and so the only time I'm replacing anything is when it break down and it can't be fixed anymore. But that means you got to pay. Rebates - seems like they would be good for people who are on fixed or low incomes and just don't have that type of cash flow.

RINALDI: So what the rebates will do is help a homeowner make that more climate-friendly decision because if they choose the more efficient, the higher technology, the more electric technology, then they will get a rebate. They can get $8,000 for a heat pump or $840 for an electric stove. And the important thing about that is that people will be able to make a decision to do the more climate-friendly option and be rewarded for it at the point of sale.

RASCOE: Well, this is making me want to figure out - 'cause as I said, my home is old - this makes me want to figure out what rebates I can get. Is there a place where it's easy to find this information? 'Cause I think part of the problem, too, can be I don't know where to even find out what I can get and how I can get it.

RINALDI: Well, the Department of Energy does have a home energy rebates website. But for each individual in their state, it's going to depend on the state. Some states may decide not to apply for the rebate program. I certainly hope that's not the case. Some already have their plans in place, have already applied. Others, they're still putting those plans together. Some of the best pathways will be to look at the DOE's website and your state energy offices.

RASCOE: That's Kara Saul Rinaldi of the AnnDyl Policy Group. Thank you so much for joining us.

RINALDI: Thank you so much for having me. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Ayesha Rascoe is a White House correspondent for NPR. She is currently covering her third presidential administration. Rascoe's White House coverage has included a number of high profile foreign trips, including President Trump's 2019 summit with North Korean leader Kim Jong Un in Hanoi, Vietnam, and President Obama's final NATO summit in Warsaw, Poland in 2016. As a part of the White House team, she's also a regular on the NPR Politics Podcast.