Hoosiers can save thousands on sustainable home upgrades through IRA - IndyStar

Hoosiers can save thousands on sustainable home upgrades through IRA

Scrub Hub: How can the Inflation Reduction Act help Hoosiers save money this year?

The Inflation Reduction Act, you've probably heard of it. The landmark federal law, which passed last year, aims to curb inflation by reducing the budget deficit, lowering drug prices and healthcare premiums, and making serious investments in clean energy.

The law sets aside billions of dollars to encourage companies and families to push forward with sustainability and climate projects ― but as a homeowner, you're probably wondering what that means for you.

For this edition of the Scrub Hub, we are answering the question: How can the Inflation Reduction Act help save Hoosier households money this year?

We are saving you the trouble of reading through the more than 700-page document to find some of the main ways to not only reduce your environmental impact, but also save money and increase the value of your home.

Short answer: You can start saving this year

There are two types of assets in the bill: tax credits and grants. Homeowners can start collecting on the tax credits this year ― 2023 ― for qualifying upgrades. The grant element is still in the works, as those funds are being divided out on a state-by-state basis.

With the tax credits through the home improvement credit (which is what will likely impact most families), homeowners can write off a portion of a home improvement they've made, as long as the investment qualifies under the act. You can only save up to a certain amount or percentage, depending on the type of upgrade. There also is a total credit limit ― $3,200 ― that homeowners can take in a year across the various investments.

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That's why some experts recommend spreading improvement projects over more than one year, if possible, to maximize the credits. Many companies and vendors will help homeowners navigate the credits, but always make sure to ask and don't hesitate to consult an expert to ensure you don't miss out.

Long answer: Energy efficiency upgrades are the focus

Okay, great ― but what can you actually get credits for? Great question! Most of the credits and savings focus on energy and energy efficiency. Here are some of the main benefits for homeowners.

One of the first steps is to figure out where to start: You might want to make some upgrades, but don't know which ones to make. The IRA includes credits for an energy audit, which can really help. By working with a qualifying energy inspector, they can assess your home and then help pinpoint which investments will help your home the most and give you the best bang for your buck. You might not need new windows, for example, but a more air-tight door could help insulate your home.

If you take the next step to retrofit your home's heating and cooling, there are lots of opportunities through the energy-efficient home improvement credit. Based on the type of furnace and air-conditioner you're looking at (and its energy efficiency rating) you can write off part of that expense. The same is true if you're looking at a heat pump or need to replace windows, doors, insulation, and more.

That tax credit can also help cover upgrades to more efficient water heaters. The IRA also includes some incentives to switch from gas to electric appliances, such as a credit for investments made to your electrical system to accommodate such changes.

If your household is considering purchasing an electric vehicle, maybe think about buying a previously-owned one. The law provides a credit up to 30% of the sales price of a used electric car, up to $4,000. That can be a serious savings meant to help make EVs more accessible to more people and families.

One of the other big credit options in the IRA is through the Residential Clean Energy Credit. As the name suggests, this is meant to help offset part of the cost of refitting your home's energy systems ― that could mean installing solar panels, wind turbines, battery storage or even a geothermal heat pump.

All of these investments and upgrades come with their own qualifying criteria, so make sure you are paying close attention and don't miss out on the savings by one small detail. While some of the technologies to achieve the credits may be more expensive, the credits aren't meant to help offset those costs. Even more, these upgrades should help achieve savings over time, through lower energy bills, using less gas, etc.

Several Indiana groups ― the Hoosier Environmental Council, Citizens Action Coalition, Solarize Indiana, The Climate Reality Project, and Faith in Place― are hosting a free, online workshop July 25 to share more on how to make the most of these opportunities. You can register here or search online for "HEC Save Money Take Action."

If you have more questions about climate and energy efficiency, or any other topics, let us know! You can ask us by submitting a question through our Google form below.

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IndyStar's environmental reporting project is made possible through the generous support of the nonprofit Nina Mason Pulliam Charitable Trust.