Here’s How the Inflation Reduction Act’s Rebates and Tax Credits for Heat Pumps and Solar Can Lower Your Energy Bill

Market Watch: The Inflation Reduction Act aims to return more financial incentives, primarily in tax credits and rebates, to consumers who opt for energy-efficient home upgrades. Investing $369 billion in climate and clean energy spending, the IRA provides for $9 billion in total energy rebates, including the $4.28 billion High-Efficiency Electric Home Rebate Program.

Eligible homeowners can get rebates as high as:

  • $8,000 for heat pump installation
  • $1,750 for a heat pump water heater
  • $840 to offset the cost of a heat-pump clothes dryer or an electric stove

Rebates for non-appliance upgrades are also available up to the following amounts:

  • $4,000 for electrical panel upgrades
  • $1,600 for insulation, air sealing, and ventilation
  • $2,500 for electrical wiring improvements

The program will run through September 30, 2031 and be administered at the state level. Households are eligible for a maximum of $14,000 in total rebates. To qualify, a household’s income cannot exceed 150% of the area median income.

Homeowners who do not qualify for the rebates can receive tax credits of up to $2,000 to install heat pumps and $1,200 a year for other energy-saving improvements, such as installing an induction stove or new windows and doors.

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