How can the Inflation Reduction Act help people become energy efficient and save money?
MINNEAPOLIS -- Congress appears to be on the verge of passing a monumental bill that could reshape our nation's economy.
The Inflation Reduction Act (IRA) has several goals, one of which is to curb climate change.
So, how can the bill help people become energy efficient and save money? Good Question.
Jeff Wagner explains the changes people could soon make from their homes to their cars.
The IRA invests nearly $370 billion into energy and climate reform. Much of that equates billions of dollars in tax credits, tax reductions and rebates for homeowners. It could save homeowners thousands of dollars not only upon purchase of certain appliances, but on their energy bills going forward.
"It really runs the gamut for who can benefit from this," said Amelia Cerling Hennes of Clean Energy Economy Minnesota.
How will this help a homeowner that wants to invest in solar energy?
"There is a consumer tax credit for rooftop solar, so you would see it after it's installed at the end of the year when you're paying taxes," said Cerling Hennes.
The average costs to install solar panels on a home is $20,000 according to the Solar Energies Industry Association. The tax credit is 30 percent, meaning you would owe $6,000 less in taxes the next year.
Thinking of going green on the road? There's also a tax credit for buying an electric vehicle. It's $7,500 for a new purchase and $4,000 for used.
"As manufacturers start releasing a whole bunch more different kinds of electric vehicles in the next few years, you're going to be seeing a lot more both new and used vehicles on the market. So, these tax credits will be even more useful as more cars are on the road," she said.
But even with credits, solar panels and electric cars are expensive for some people.
"The bill specifically benefits low, moderate and middle-income families," said Mark Wolfe, executive director of the National Energy Assistance Directors' Association. "It helps families transition to an all-electric environment.
Low-income families are eligible for up to $14,000 in rebates to buy electric appliances, of which the rebates would cover 100 percent of the costs. That includes heat pumps, electric water heaters, stoves, clothes dryers. For moderate income families, the rebate would be 50 percent.
How soon do those savings come in for these families?
"These are instant rebates," said Wolfe.
Families above those income limits would be eligible for a tax reduction if they make similar changes to their home.
There are also tax credits for weatherizing your home with new insulation, windows, and doors.
According to Rewiring America, a family can save $1,800 per year on their energy bill if they replace their furnace with electric heat pump, install an electric water heater, convert to an electric vehicle and add rooftop solar panels.
"You're not only reducing your energy footprint, you're helping reduce emissions, you're helping affect climate change," said Wolfe.
And if money is tight right now, the good news is there's no rush.
"A lot of these tax credits are going to be in place for the next decade," said Cerling Hennes.
The bill still needs to pass through the House, which is expected this Friday.
For more information on other ways to save money at home, as well as for businesses, click here.
