This is a continuation from yesterday's post. (https://adjuvancy.com/wordpress/2023/02/07/tax-credits-to-be-harvested) Items highlighted in blue do not earn a tax credit. Items highlighted in red yield the credits.
Landscaping does not earn a tax credit under the provisions of the IRA. But, it does save water and energy. Planting shade trees can help keep our homes cool; drought resistant plants let us comply with water restrictions or help save us money on water and sewer bills.
Here’s another small improvement. Putting in a smart thermostat (IoT device, controlled by our smartphone) is a cheap improvement (typically less than $ 100 cost). But, now you can turn your AC on and off from anywhere, change the house temp for its unoccupied status. (I actually use this for the air conditioning in the house; but since I’ve been house-bound due to my illness, it’s been much less frequent than in previous years.) This is also not covered by the IRA.
The IRA offers 30% tax credits for replacing your windows and doors. Our older windows and doors let a slew of BTU slip out of the house, so replacing them is a great idea. But, there is also a maximum $ 1200 credit for all the energy-efficient home improvements per year, with $ 600 and $500 detailed for doors. So, here’s an idea. Unless the window vendor is offering you a really great deal, spread the window upgrade over three years. That way you can get a $ 600 credit each year (for $ 2000 of window upgrades). If your total costs will be about 10K, then split them into 3K per year- you are sill limited to $ 600 a year for the next three year (when the credit will expire), but you will also get $ 1200 more in tax credits!
The IRA also helps us plan for these improvements. We can obtain a home energy audit to see what improvements we may need. And, the IRA let’s us earn a $ 150 credit for that.
Then, there’s the Electric water heater. After all, about ¼ of the gas consumption in our homes is for hot water heating. And, with the almost 60 million gas water heaters in the US, that means even the slight leaks they manifest provide some 91 Ktons of methane released to our atmosphere annually – and methane is far more potent than carbon dioxide when it comes to effecting climate change. The IRA wants us to choose heat-pump water heaters (the only versions that earn a credit) , which can provide up to $ 1750 in rebates!
If you are like me (a single resident), then you do about 50 to 100 loads of laundry a year. Larger families raise that number to 300 (that’s according to the US Department of Energy). Given that, switching to an efficient (Energy-Star) washer and/or dryer unit can save 20% of the energy compared to those older units- and 30% of the water use. (Again- here comes the pitch for heat pump dryers.) The IRA provides for an $ 840 rebate for the electric heat pump clothes dryer. Sorry, nothing for the Energy Star units, except for the savings we will develop.
Here’s a hot button issue. How about replacing your natural gas stove with an induction stove? No, I am not mentioning this because of the purported respiratory disease link, but because (although expensive to buy starting at about $ 1K), they are more efficient and have much lower energy demands. The IRA provides up to $ 840 in tax credits, as long as the don’t household income does not exceed 150% of the median income in its geographical region.
Last, but not least (especially since it involves some pretty big money), there’s the electric vehicle credit, that I’ve discussed before. Assuming the car is built in North America (as is its battery), there’s a $ 7500 credit (electric and hybrid vehicles). But, it’s also limited by one’s income- that credit is only afforded those whose annual income is $ 150K for individuals or $300 for joint filers. Moreover, the vehicle cost can’t exceed $ 55K (trucks and SUV’s can’t exceed $ 80K in costs.
Enjoy your credits!
