The Inflation Reduction Act is a historic action aimed at combating rising global actions. However, this legislation is beneficial not only for the environment but also for your bank account.
Thanks to the IRA, Americans can take advantage of tax credits and rebates when they make eco-friendly updates to their homes — saving up to $1,700 on certain upgrades.
The scoop
In an effort to reduce the U.S.'s use of dirty energy, Congress passed the Inflation Reduction Act, which incentivizes homeowners to transition toward clean energy. Under the IRA, homeowners can earn back money when they make environmentally friendly updates to their home.
Upgrading your water heater is one of those eco-friendly changes you can make that will save you money thanks to the IRA. According to the Department of Energy, the IRA will cover up to 30% of the project's cost — up to $2,000 in tax credits for the 2024 tax year.
Certain states and household income levels may also qualify for rebates up to $1,750 when homeowners replace their water heater with a highly efficient heat pump water heater.
How it's working
The Inflation Reduction Act is helping homeowners across the U.S. make eco-friendly updates to their home that will not only save them money down the road but also decrease their household's pollution output.
By switching to eco-friendly appliances, such as heat pump water heaters, you can significantly reduce the environmental impact of your home. Electrifying your home and swapping your gas-powered furnace for an electric heat pump can reduce a household's planet-warming pollution by 45-72%, according to a report by NRDC.
If you're looking to make eco-friendly changes to your home, consider exploring organizations that can help you make the switch, such as Arcadia and WattBuy. Homeowners can also use Rewiring America's free online tool to identify available tax incentives and generate savings estimates after upgrading their homes.
What people are saying
Industry experts have been encouraging homeowners to take advantage of the tax credits and rebates as they make eco-friendly updates to their homes.
"In essence, the IRA creates an $8,000 bank account for every American household … if people figure out how to access it and use it," environmental journalist Bill McKibben said during a press briefing.
McKibben also explained the benefits of switching to certain environmentally friendly appliances.
"The good news is that these technologies are better than the ones that they replace. Your magnetic induction cooktop is better than the gas flame that you cook on, cheaper, and it doesn't give your kids asthma," McKibben said. "The heat pump is an elegant replacement for the furnace and cheaper to use in the long run."
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