Everybody loves free money, especially when it can help you improve your quality of life or even pay for a home improvement project you’ve been planning to do anyway.
With winter on the way, you might be considering home renovations to make your home cozier, more comfortable, and more energy efficient. President Joe Biden is sending taxpayers an early holiday gift with tax credits for specific home improvements.
From solar panels to insulation, you can reduce your tax bill and even get money back thanks to rebates and credits introduced by the Inflation Reduction Act (IRA) of 2022, according to the White House website.
Make sure to claim these incentives before they expire at the end of 2023, and use these tips to budget for your home reno project.
Rooftop Solar Panels
A solar installation remains one of the best ways to reduce your home energy costs. You can save up to $1,500 per year on your electric bill with a solar array that accommodates all of your home’s electric needs, according to Forbes. That could equal as much as $33,000 in savings if you stay in your home 25 to 30 years.
Right now, the U.S. government is providing a 30% tax credit to help cover the cost of your solar installation. That’s in addition to any state or local incentives offered near you.
Home Energy Audit
Before you make additional improvements, you might want to get a home energy audit to determine the renovations that will give you the most bang for your buck.
The federal government is offering a $150 credit for a home energy audit, which will outline next steps to improve efficiency in your home. You can also reach out to your local electric provider to see if they offer free home energy audits.
Doors, Windows, and Insulation
With your home energy audit as your roadmap, you can make improvements such as upgrading windows, doors, and insulation. You can claim a tax credit of up to $1,200 for 2023 regarding the addition of insulation or energy efficient doors and windows.
Electric Heat Pump for Energy Efficient Heating and Cooling
If you install an electric heat pump, you can claim an extra $2,000. Lower income families can tap into rebates of up to $8,000 for the installation of an electric heat pump, plus an extra $4,000 to help make the home heat pump ready with modernized electric systems.
Energy Efficient Appliances
If you’re planning a kitchen renovation, you might be able to save a bundle on new energy efficient appliances. The IRA offers up to $4,000 for energy efficient improvements including appliances, with up to $8,000 available for lower income homes.
If you upgrade your gas clothes dryer to an electric heat pump clothes dryer, you may qualify for up to 100% back on your purchase (up to $840).
Tapping into this rebate can help you replace an aging or broken appliance — or upgrade your kitchen appliances for a fresh, new look.
Start Your Project in 2023 to Claim These Credits
Many of these incentives are set to expire in 2024, so now’s the time to start that home reno project. Save all receipts. It’s always a good idea to speak to a tax accountant if you aren’t sure about the tax credits you can claim.
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