Tax Credits to be Harvested! |

Items in red are afforded tax credits. Items in blue save us money, but are not considered worthy of tax credits.

I know you’ve been taking advantage of some of the energy tax credits for 2022. But, the Inflation Reduction Act (IRA) that passed last year gives you even bigger opportunities. Especially if you think outside the box.

Covering these tax credits is involved so the discussion gets pretty long. As such I will break it into two posts- today and tomorrow.

The IRA, which is aimed at diminishing the effect of climate change upon our lives has afforded us some pretty darn tooting good tax credits for us. If we make our personal home more environmentally friendly, we get some great tax credits. And, these improvements range from big ones (making one’s house reliant upon solar energy) to teeny ones (changing our stove for an induction range).

Let’s start with the solar panels provisions. These tend to be expensive (even with the deals the vendors offer). But, more of us are adding them to our homes- a few year ago only 6% of us had solar panels; now the number has climbed to 8% of our residences The prior year credit of 26% tax credit is expanded to 30% for the next10 years, when it will revert back to 26%. After that, it drops even further to 22% in 2034; unless Congress alters the credit, it will evanesce shortly thereafter. (This credit is worth some $ 7500 for a typical solar panel system.)

Given that we started with solar panels, we should jump to home power storage (home batteries). After all, we need to store the excess energy produced when the sun shines. The solar panel credit now includes power storage provisions. Heretofore, these were not provided a tax break; now they are worthy of such a break.

We can also modify our roofs (cool roofs) to reflect sunlight; that’s a way to keep our houses cooler in the summer months. (You can even put a lawn or a garden atop your house roof. And, believe it or not, these are not really more expensive that conventional roof. Except- this is not a benefit of the IRA. [It was a credit in 2022.])

I doubt many of us can take advantage of this next home improvement. Most of us aren’t domiciled where we can take advantage of wind turbines. The costs- and design- are involved, which means the costs range from a couple of hundred dollars (not really) to thousands and thousands of bucks. The bigger units obviously harness a lot of power. And, these entail a 30% tax credit to the homeowner, should a system be installed.

And, what about heat pumps? Usually powered by natural gas, these units are air conditioning replacements- and maybe even serve as hot water heaters. They are called heat pumps because they suck heat from outside the home and pump it inside; this thereby raises the internal home temperature in the winter- the opposite is used in the summer when we need air conditioning. The costs for these devices range from $ 1500 to $10000- and yield a credit of as much as $ 2000 when you’ve added one to your home.

Installing a whole-house fan that pulls cool air from outside and circulates it throughout your house can actually cut our AC usage down a lot. (This is especially true for those regions where it gets cooler at nighthot , while the daytime temperatures get pretty high.) One would run the fan at night, cooling the house down, alleviating the demand on the covenantal AC during the day. Relatively inexpensive ($ 500 to $ 2K) systems, but the IRA doesn’t provide a credit for them. But, you may want to install one anyway to cut down on your AC costs.

Radiant floor heat employs tubing underneath or incorporated into the floor of a house. Our hot water radiant heat system was necessary for the kitchen addition we built years ago. (Water is the most efficient- but there are hot-air and electric versions, too.) The key thing to realize is these radiant floor heat systems are generally more efficient than baseboard heating or forced air systems However, their costs can total some $ 20 a square foot. Moreover, they are not delineated in the IRA, but some states may provide a tax credit for their use. (That would be through the HOMES- Home Owner Managing Energy Savings state grant system,) If your state adopts this, you may be able to get a $ 4000 credit ($8000 for low-to-moderate income households) on your taxes.

We’ll finish this up tomorrow.