Electrification Incentives and Tax Credits
Electrification Incentives with the Inflation Reduction Act
The Inflation Reduction Act, enacted in the summer of 2022, can empower you to save money on energy-saving home improvements. If you’re planning electrification projects for your home, including heating and cooling upgrades, heat pump water heaters, insulation and air sealing, or electrical panel upgrades, read on to explore the incredible savings available to you!
25C Tax Credit – Energy Efficiency Home Improvements:
The 25C Tax Credit, now extended until 2032, enables homeowners to claim a federal tax credit equal to 30% of energy-efficient home improvement costs. This update represents a significant increase from the previous 10% credit. The 25C tax credit applies to a range of upgrades, including:
- Heat pumps, ductless mini-splits, and heat pump water heaters ($2,000 cap total)
- Electrical panel upgrades ($600 cap)
- Insulation and air sealing ($1,200 cap)
- Efficient window upgrades ($600 cap)
- Efficient door upgrades ($500 cap)
- Home energy audits ($150)
Each category has specific maximum credits, and you can claim up to $1,200 in total combined upgrades per year. However, heat pumps and heat pump hot water heaters have a separate $2,000 annual limit. By combining various home or building improvements, such as a heat pump installation, electrical panel upgrade, and efficient windows, you could potentially claim up to a $3,200 tax credit in a single year.
Federal Solar Tax Credit (Investment Tax Credit):
The solar tax credit allows you to claim a federal tax credit equal to 30% of your solar installation and material costs. This credit has no maximum limit and has been extended beyond its initial expiration date. Residential systems now qualify for the 30% solar tax credit until 2032, and as of 2023, the credit also applies to stand-alone battery storage systems.
Electric Vehicle Infrastructure Tax Credit:
If you’re considering electric vehicles, the renewed Electric Vehicle Infrastructure Tax Credit can save you money. This credit, extended through 2032, is worth 30% of the installed cost of electric vehicle home charging infrastructure, capped at $1,000. To claim the credit, simply file Form 8911 with the IRS.
Washington Sales Tax Exemption for Solar and EV Charging:
In addition to the federal incentives, Washington State provides a sales tax exemption for solar energy systems and EV chargers. As a customer of Frederickson Electric, we handle all the necessary documentation with the Washington State Department of Revenue to ensure you benefit from this tax break.
Stay Tuned for More Incentives for Electrification:
We are eagerly awaiting further news about new rebate programs, such as HOMES rebates and High-Efficiency Electric Home rebates, which are expected to be rolled out later this year or in early 2024. These additional incentives will enhance the benefits of electrification projects and provide even more opportunities for savings.
Make Your Home or Building Efficient and Comfortable:
To learn more about how you can leverage rebates and incentives to enhance your home’s efficiency and comfort, contact Frederickson Electric today. Our knowledgeable team is ready to assist you in navigating the available incentives and transforming your home into a sustainable haven.
Call us at 360-531-6130 or reach out to us online to get started on your electrification journey. Let’s harness the power of incentives to create a more sustainable and energy-efficient future together.