Here’s how much money you’ll get with the Inflation Reduction Act

The Inflation Reduction Act (IRA) is a “free electric bank account with your name on it.” It’s packed with rebates and tax credits that will help Americans purchase everything from EVs to solar and electrical appliances to heat pumps. Check out this easy-to-use IRA savings calculator from Rewiring America that tells you what you get – and when.

Rewiring America is an electrification nonprofit whose “purpose is to make electrification simple, measurable, and inevitable.” We upgraded to a 200-amp service panel and had rooftop solar and Tesla Powerwalls installed last fall, so this savings calculator has been, and will continue to be, a valuable tool for us. (We’re saving up for a heat pump.)

I was able to confirm (and subsequently reconfirm, right before I finished my 2023 taxes) in seconds that we can claim a 30% tax credit for solar, a 30% tax credit for battery storage installation, and a 30% tax credit, capped at $600, for our electrical panel upgrade.

We bought a US-made 2023 Volkswagen ID.4 in late 2022, and the Rewiring America calculator confirmed that our car qualified for the full $7,500 tax credit before we completed the purchase.

In my electrification journey, I’ve found that I need to do my own research and advocate for myself, as electricians, heat pump installers, and car dealerships are still learning about how the new tax credits and rebates work. More often than not, I fill them in. In fact, it only just happened yesterday. (Then I share what I learn with you – that is my job, after all.)

The folks who are helping us to electrify want to know about the IRA rebates and tax credits, and they seem to genuinely want to help me in turn.

Inflation Reduction Act rebates

On July 27, 2023, the US Department of Energy (DOE) rolled out guidelines for states, territories, and the District of Columbia to apply for their share of $8.5 billion in electrification and energy efficiency rebates provided by the IRA. That funding is going to save consumers a lot of money on home improvements and electricity bills.

Rebates include home electrification and appliance rebates that will act as immediate discounts at the point of sale for low- and moderate-income households when making qualifying electrification purchases.

There’s also the home efficiency rebates program that rewards modeled energy savings of at least 20% or measured energy savings of at least 15%. So, if you save a specific amount of energy and have receipts, then you get a rebate. It’s not income-capped, but at least half of the program’s funding will go to low-income households.

DOE Deputy Secretary David Turk said in August that the DOE expects that “these rebates will start to be available to consumers in some states as early as the end of this year and continuing on a rolling basis in 2024.”

Rewiring America has a disclaimer on its Inflation Reduction Act savings calculator page about state rollouts:

The rebates may be implemented differently in each state, so we cannot guarantee final amounts, eligibility, or timeline.

The ‘Smith family’

The tax credits are ready now, so it’s worth familiarizing yourself with the IRA savings calculator. Here’s how it works: Type in your zip code, homeowner status (renters qualify, too), household income, tax filing status, and household size into the IRA Savings Calculator, and click “Calculate!”

It then displays your personalized incentives and splits out tax credits from upfront discounts (i.e., rebates).

I created the “Smith family” as a case study: a family of five, homeowner, household income of $120,000, head of household tax filing, zip code 19352 (that’s Pennsylvania).

The calculator says the Smiths will qualify for rebates in 2024, and they qualify for $15,600 in available tax credits right away, which means they can claim those tax credits on their 2023 taxes, if they purchased rooftop solar or an EV before December 31. (It’s too late for solar tax credits now for 2023 if you haven’t already installed it, but there are some great end-of-year EV deals, including from Tesla.) They have an estimated energy savings per year of $1,500, the latter of which is based on energy costs in Pennsylvania.

Rebates – what Rewiring America calls “upfront discounts” – are based on a percentage of area median income, and the Smith’s area median income is $114,400, as they live in the 19352 zip code area. (You can find your area median income using this Area Median Income Lookup Tool from Fannie Mae.)

So that means when the rebates are rolled out in Pennsylvania next year, the Smiths are going to qualify for some good ones. Here’s what they’d get for an induction stove as a moderate-income household, for example:

For low-income households (under 80% of Area Median Income), the Electrification Rebates cover 100% of your electric/induction stove costs up to $840. For moderate-income households (between 80% and 150% of Area Median Income), the Electrification Rebates cover 50% of your electric/induction stove costs up to $840. 

Home Depot sells induction ranges for between $1,000 and $3,000. If the Smiths opted for a lower-cost model – Samsung makes one for $1,098 – then their brand-new induction range would be under $500. (As an aside, if you’ve never cooked on an induction range before, it’s fantastic. It’s like a gas stove without the emissions, and you couldn’t burn yourself on it if you tried.)

Rewiring America also provides an easy-to-understand online guide to the IRA called “Go electric! (now).” You can access that here.

Read more: The US Treasury released EV charger tax credit guidance – here’s how to find out if you qualify

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