These days it seems everyone is pushing homeowners to go green. Think electric cars, solar panels, heat pumps and triple-paned windows. It’s a costly undertaking, considering fully electrifying a house in Colorado costs $42,000 on average, according to Common Sense Institute, a Denver-area think tank.
But now the federal government will help everyone across the country, regardless of wealth, retrofit their homes with energy-efficient technology aimed at cutting carbon emissions linked to climate change. Starting next year, the Inflation Reduction Act of 2022 provides a multitude of tax credits and energy rebates for eco-friendly projects.
The act’s key provision subsidizes homeowners up to $1,200 annually for qualified home-improvement projects without a lifetime limit. This allows consumers to spread out projects and receive the maximum rebate each year.
Under the new program, homeowners can get a 30% tax credit for:
- Building a home charging station for electric vehicles.
- Installing electricity-generating systems like solar panels.
- Retrofitting with high-insulation doors and windows.
A few exceptions exist to the 30% rule. The new law allows for a 100% credit for installing qualified water heaters, furnaces, heat pumps, boilers and related systems, up to the annual limit. In some cases, systems may qualify for a $2,000 credit, the only deviation from the original limit.
Small-business owners are also eligible to receive subsidies, including a tax credit up to $5 per square foot for improvements that deliver lower utility bills, and a 30% tax credit for switching to low-cost solar power or purchasing electric vehicles.