You May Save More Than You Expected By Going Green

Making your home eco-friendly has often seemed like something that’s great in theory, but expensive in practice. But some new tax credits and rebates in the Inflation Reduction Act could make it much less expensive (or even free!) to make big energy-saving upgrades to your home. 

While some benefits have income limits, others can be used no matter what your family makes. So whether you’re just looking to upgrade your appliances—or you want to make updates that’ll add up to big energy savings for your entire home—here’s how you may be able to save big. 

Switch to electric appliances

If you’re in the market for new appliances, you could score significant rebates on new electric stoves or cooktops, water heaters, and dryers—and even help covering any electrical work required to make the switch from gas to electric. 

And there’s a good, green reason for making the switch. “Electric appliances are powered by the electrical grid, which has gotten cleaner over recent years,” says Lauren Urbanek, deputy director of clean buildings at the Natural Resources Defense Council. 

“More of it is powered by wind, solar—really clean energy. So any appliance that’s connected will have lower emissions over their lifespan, as the fuel becomes even cleaner,” Urbanek says. Plus, gas stoves alone release the same amount of methane as 500,000 cars, according to a 2022 study in Environmental Science and Technology. 

The new rebate covers up to $840 on a new electric cooking appliance or electric dryer, or $1,750 for a heat pump water heater, and up to $500 to cover any electrical work you need to make the switch. 

The size of the rebate you get depends on your income. “Folks that make 80 percent or less of the area median income may be able to get this without any cost out of pocket,” Urbanek says. If you make between 80 to 150 percent of the local median income, you’ll get half off of your new appliance, but the savings end there. “The electrification rebates have an income cutoff maximum of 150 percent of the local median income,” Urbanek says. (You can look up the median income in your neighborhood here.)

Change up your heating and cooling systems

Switching to a more eco-friendly heating and cooling system, such as heat pumps, can become a lot more affordable now. “Today’s heat pumps are significantly more efficient than something like a gas furnace,” Urbanek says. “They will upgrade the energy efficiency of your home and save you money over time.” The heat pumps work as both heating and cooling, taking the place of both a furnace and air conditioner.

Under the Inflation Reduction Act, homeowners who make 80 percent or less of the local median income can get rebates of up to $8,000 for heat pump installation, while households making between 80 percent and 150 percent of the local median income can get up to $4,000. And there’s also a federal tax credit that will cover 30 percent of the total cost of your heat pump, up to $2,000. 

Make additional eco-friendly home improvements

There’s a whole slew of other projects that could make your home more energy efficient—and the HOMES rebate program could make those a lot more affordable.  “The HOMES rebate focuses on the modeled or measured energy performance of home,” Urbanek says. “That opens it up to a wide variety of projects—basically anything that could save energy—air sealing, adding more insulation to attic or basement, replacing windows.”

This is a 30 percent tax credit on the cost of upgrades, capped at $1,200 per year. 

Keep in mind that you can’t double dip here: You can’t get the heat pump rebate through one program, then claim the same heat pump again through the HOMES Rebate program. 

Invest in solar panels or batteries

Solar panels can reduce or even completely replace the electric portion of your bill by turning sunlight into electricity—and solar batteries store some of the energy you produce to help power your home after dark or during power outages. 

This tax credit, which begins phasing out after 2032, gives homeowners a 30 percent credit on their taxes on the installation of solar panels, batteries, and equipment, along with any installation costs and fees. 

As a tax credit, this one is available to all homeowners, regardless of income level. (Though keep in mind that if you owe less in taxes than the cost of your solar installation, you’ll only get back the amount you paid in taxes.)

Time your home improvements

If you just replaced your home’s furnace or your stove, now may not be the time to make the switch. But if you know that you’ll be in the market for a new one sooner rather than later, you may want to consider jumping in if you’re eligible for rebates.

“The rebate programs will have a lot of money, but we expect there will be a lot of interest too,” Urbanek says, especially as these will be given up front as money off the products. “The funding pot, while substantial, is not unlimited—so if it’s something you would consider doing, do it early to make sure you can access it.”

What you can do now

It will take time for the details of the law to get smoothed out, so you don’t necessarily want to sign on the bottom line for a new electric dryer just yet. (Next year looks like the potential timeframe.) But even if you’re not quite ready to buy, you can get the ball rolling now so you’re ready to go when the law is implemented. 

Get a home energy assessment

Home energy experts can take a look around your home and show you any places where upgrades could make your home more efficient, whether it’s easy eco-friendly home improvements like redoing the caulk around windows, or larger projects like replacing windows. Depending on where you live, your energy company may offer one for free or low cost, or you can set up an evaluation with an independent energy consultant. (Keep in mind, though, that doing this now means that you won’t be able to write off the fees for your assessment—and there is currently a $150 incentive toward a home energy assessment in the bill.)

Start talking to contractors

If you’re planning a larger project, such as replacing your heating and cooling systems or installing new windows, you can start researching local contractors, getting proposals, and checking references, so you have your project ready to go as soon as the program starts up. 

Get your funding set up

Since some of the benefits come in the form of tax credits, you’ll need to outlay the money first, then get reimbursed when you file your taxes and get your tax return. So start saving toward the upgrades now, or look for financing options you can use.  

Look into local credits and incentives

If you can’t wait until the program is set up, there may still be state-level rebates or incentives through your local power company that you can use to reduce your costs. (And those may still be in effect next year as well, to make the switch even easier.)