Inflation Reduction Act

The Inflation Reduction Act (and the Bipartisan Infrastructure Law) of 2022 allocates significant funding to make clean energy and safer, healthier homes more affordable for Americans. Much of this funding comes in the form of tax credits, which are available now. Additional funding in the form of rebates, which may be tied to income levels, is expected to be available sometime in 2024. Below is an overview of key incentives and where to find more information.

HOME ENERGY

Available Now:

Tax credits are currently available for certain home energy upgrades.*

• The 25C Residential Energy Efficiency Tax Credit includes 30% up to $2,000 for air source heat pumps** and heat pump water heaters, and 30% up to $1,200 for some weatherization and electrification upgrades.

• The 25D Residential Clean Energy Tax Credit includes 30% for ground source (geothermal) heat pumps, certain solar installations, battery storage, and more.

Both 25C and 25D credits are nonrefundable, meaning they can only reduce existing tax liability. Check out these factsheets for more details about these credits: Rewiring America factsheet and IRS factsheet

Available Later:

Efficiency and Electrification Rebates for home energy improvements are also included in the IRA, but how they will be implemented in New York State is not yet determined. More information about these rebates is expected in early 2024.

ELECTRIC VEHICLES

The IRA also includes tax credits for electric vehicles. Qualified new electric vehicles may be eligible for up to $7,500 in tax credits, and qualified used electric vehicles may be eligible for up to $4,000 in tax credits. Combined with the Drive Clean Rebate offered in New York, there are many incentives for electric car purchases.

ELECTIVE PAY

Businesses, tax-exempt organizations, governments, and others can receive certain clean energy tax credits using elective pay. Learn more from the IRS’ overview of elective pay and frequently asked questions, this resource from The White House, or the relevant NYSERDA webpage.

BUSINESSES

Though much of the Inflation Reduction Act (IRA) focuses on consumer savings, the legislation also lowers the cost for businesses to invest in clean energy and energy efficiency. Learn more about IRA business opportunities on NYSERDA’s website.

ADDITIONAL RESOURCES

• Information from NYSERDA about the IRA in New York State

• Energy Savings Hub from the U.S. Department of Energy. Scroll down to the “Appliances,” “Electric Vehicles,” and “Home Improvement” tabs for details about incentives for specific technologies

• A breakdown of incentives from the Department of Energy

• Updated IRA information from the federal government

• NYS Guide to IRA from NYSERDA

• IRS information about IRA tax credits

• IRA Savings Calculator from Rewiring America

• More information about the geothermal tax credit

• More about the air source heat pump tax credit

  • **CEE list of heat pump models eligible for 25C credit

• More about a credit for an electric panel upgrade

*For specific questions about tax credits, please consult a tax professional.