Celebrating one year of the Inflation Reduction Act: How Virginians Can Benefit
About a year ago, on August 16, 2022, the Inflation Reduction Act (IRA) was passed by Congress and signed into law. This landmark legislation intended to tackle inflation, lower costs for Americans, accelerate the deployment of clean-energy technology, combat climate change, and advance environmental justice. As we mark the first anniversary of the IRA, let’s take a closer look at key regulations that are intended to benefit Virginians by helping them save money. 1
1. Empowering Energy Efficiency in Homes (25C)- Up to $3,200
The IRA ushered in a new era of support for energy-efficient home improvements. Under the Energy Efficient Home Improvement Credit (25C), homeowners now have the opportunity to receive tax credits amounting to 30 percent of the total cost of eligible energy-efficient home upgrades undertaken throughout the year. While improvements related to heat pumps, heat pump water heaters, or biomass stoves are capped at $2,000, other energy-efficient upgrades, including home energy audits, new exterior doors, windows, skylights, insulation, and electrical panel upgrades, offer tax credits of up to $1,200. These incentives encourage Virginians to embrace eco-friendly solutions while lightening their financial load.
2. Promoting Residential Green Energy Initiatives (25D)- Up to 30% tax credit
With a forward-looking approach to sustainability, the IRA extends a 30 percent tax credit to various residential green energy installations. This credit encompasses solar panels, solar water heaters, fuel cell property expenditures, small wind turbines, geothermal heat pumps, and battery storage systems.
3. Affordable Electrification Upgrades (HEEHRA)- Up to $14,000
Recognizing the benefits of electrification in energy consumption reduction, the IRA allocated $94 million to the High-Efficiency Electric Home Rebate (HEEHRA) program. Households that make less than 80 percent of their Area Median Income (AMI) will be eligible for rebates that cover 100% of the purchase and installation costs for qualified electrification projects. Moderate-income households making between 80-150 percent AMI will be eligible for rebates covering 50 percent of the cost of home electrification projects. To determine AMI in your area, click on Housing Forward VA. Although the program is expected to launch soon, exact availability dates are yet to be confirmed.
4. Energy Efficiency Home Improvements (HOMES)- Up to $8,000
The Home Owner Managing Energy Savings (HOMES) rebate program, supported by a $94.5 million allocation, incentivizes energy-efficient home improvement projects. The rebates are tailored to reward homeowners who achieve substantial energy savings through retrofits. These rebates range from $2,000 for a 20 percent reduction in energy usage to $4,000 for a 35 percent reduction. With a focus on driving impactful energy efficiency measures, this program propels homeowners towards more sustainable living. Although the program is expected to launch soon, exact availability dates are yet to be confirmed.
5. Supporting Electric Vehicle Adoption (30D)- Up to $7,500
Electric vehicle (EV) adoption has received a considerable boost through the IRA’s tax credit provisions. For new EV purchases, the modified 30D tax credit is extended for a decade, offering up to $7,500 in savings. This initiative encourages a shift towards cleaner transportation while accommodating modified eligibility criteria based on buyer income, vehicle price, and other factors. Additionally, the Previously-Owned Clean Vehicle Credit (25E) provides buyers with a 30 percent discount, up to $4,000, on the cost of a used EV.
6. Enhancing Home EV Charging Infrastructure (30C)- Up to $1,000
The IRA promotes the installation of home EV chargers through an extended Alternative Fuel Vehicle Refueling Property Credit (30C). Homeowners in eligible census tracts can receive a 30 percent tax credit, up to $1,000, for installing EV chargers. This initiative paves the way for an accessible charging infrastructure, facilitating the transition to electric vehicles.
The IRA reflects a commitment to economic stability and sustainable living, right here in Virginia. Through the provision of consumer rebates and tax credits, the IRA empowers Virginia households to adopt energy-efficient practices, utilize renewable technologies, and opt for eco-friendly transportation options. These measures don’t just ease financial pressures but also drive our state towards a greener, more sustainable future.
1 Virginia Energy, Consumer Rebates and Tax Credits Created Under the Inflation Reduction Act, https://www.energy.virginia.gov/energy-efficiency/Inflation-Reduction-Act.shtml