When Congress passed the Inflation Reduction Act (IRA) this summer, it set in motion the potential for what U.S. Senate Majority Leader Charles Schumer called “a game-changer,” “a turning point,” and “one of the defining legislative feats of the 21st century.”
The IRA, valued at $700 billion, is a massive package of climate, tax, and health care measures. It invests roughly $370 billion over 10 years to tackle the climate crisis by incentivizing businesses to invest in green energy as well as regular Americans to transform to an electrified future. But we need to take action to realize the savings.
Here are 4 things we can do:
1. Switch to electric household appliances
The IRA offers households up to $14,000 in up-front discounts over the next 10 years to switch over to electric appliances — covering up to 100 percent of project costs for low-income households and up to 50 percent of costs for moderate-income households.
What is considered “low income” or “moderate income?” It is relative to where you live and how big your family is. Compared to the “Area Median Income” (AMI) for your region, any household making less than 80 percent of AMI is considered low income, and any household making between 80 percent and 150 percent of AMI is considered moderate income.
Rewiring America makes it easy to understand your potential savings and features a calculator that estimates that a 4-person home with a household income of $86,000 in Saratoga Springs, which is the median according to the U.S. Census Bureau, could save almost $14,000 in upfront discounts plus another $4,450 in tax credits over 10 years.
For example, if you are thinking of installing an electric heat pump air conditioner/heater for your home, you could be eligible for up to $8,000 in upfront discounts and up to $2,000 in tax credits starting in 2023. According to This Old House, average unit and installation costs come to around $3,500 to $7,500.
2. Buy an electric car
There’s a $7,500 upfront discount for buying a new electric car or $4,000 for buying a used electric vehicle. Starting in 2024, these tax credits will be transferable to dealers, essentially making it easier for you because it would be an upfront discount instead of submitting paperwork with your tax returns. For more information on purchasing an electric vehicle and additional purchase incentives provided by New York State, read this post.
3. Install rooftop solar and home storage
The IRA provides a 30 percent tax credit for rooftop solar. Rewiring America’s calculator shows the average 6kW rooftop solar installation costs about $19,000, so the average tax credit would be around $4,700.
4. Make major investments in affordable housing and multifamily rental units
Don’t own your own home? Work hand-in-hand with your landlord to help them see the benefits of the IRA. Landlords can apply for new funding for affordable housing energy retrofits.
Looking for more ways to fight climate change? Use the Cure100 Carbon Tracker App to find ways to reduce your carbon footprint, improve your health, and save money.