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Posted on December 6, 2022 by Bob Jenks
Tags, Energy, General Interest
You may have heard about the Inflation Reduction Act passed by the federal government. This law opens billions of dollars for energy and the environment. But did you know you can receive tax credits for energy upgrades starting in 2023?
Oregon households could save thousands of dollars on heat pumps, home weatherization, electric vehicles, and other clean energy purchases due to new federal tax credits. The tax credits are part of a package of new programs designed to accelerate the transition to a clean energy economy.
Tax credits will be available on many purchases starting in 2023. An additional program will soon be added and will provide rebates to customers who meet income qualifications.
Consumers can get a 30% tax credit, up to $1200 per year, for weatherization investments like insulation, new windows, and doors:
The annual limits for specific types of qualifying improvements will be:
Heat pumps
Heat pumps are the most efficient way to heat both water and air. Heat pumps can replace both your furnace and air conditioning since they heat and cool air. These highly efficient systems move hot air either into or out of your home. They can be 300-400% more efficient than a standard furnace. Many households save as much as 70% on their heating bills with a heat pump.
Heat pump water heaters are also a good way to save money on your energy bills. Water heating is the second largest energy use for an average home. These appliances are two to three times more efficient than a traditional water heater. Making this switch can save you hundreds of dollars on energy bills each year.
Heat pumps and heat pump water heaters can qualify for tax credits of $2,000.
Electric Vehicles
The current tax credit of $7500 for a new electric vehicle is extended through the end of 2032. These tax credits are limited to sedans that cost less than $55,000 or vans and SUVs that cost less than $80,000 and the credit has limitations based on where the vehicle was assembled and where the minerals for the battery were mined. In addition, this tax credit is only available for individuals making less than $150,000 per year, or married couples with a joint income of $300,000.
A new tax credit is available for used electric vehicles. The credit is equal to 30% of the cost of the car and capped at $4000. In 2024, these tax credits can be transferred to the dealer and turned into discounts at the time of purchase.
Solar Panels
The Residential Clean Energy Credit provides a tax credit of up to 30% for clean energy investments such as solar, geothermal, or battery storage. Importantly, this tax credit is retroactive to the beginning of 2022.
Beyond Tax Credits: Rebates are Coming
Many households cannot afford to spend thousands of dollars and wait months to offset that with a tax credit. A new program that will be administered by the states will off rebates on energy-efficient appliances. This will include heat pumps, heat pump water heaters, induction stoves, and other energy-efficient appliances.
Eligibility for the rebates depends on how your income compares to the region’s median income. If you earn less than 80% of the median income, you can get a rebate of up to 100% for many appliances or upgrades. If you make between 80% and 150%, then you can get back 50% of the cost, with an upper limit of $8000.
CUB is watching the rollout of both tax credits and rebates and will provide accurate information as new programs become available. Sign up for our email newsletter for the latest on programs to save on energy and other important information about your utilities.
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