by Kevin Brasler

Last updated November 2022

Our discussion on how to save energy at home briefly hits on more than 30 changes you can can make in and around your home, from cheap-yet-effective steps to upgrades that require upfront spending, but quickly pay for themselves from lower utility bills to systems and renovations that minimize what you pull off the grid, but come at steep prices.
 

Federal Rebates and Tax Incentives to Help Pay for Green Improvements

More efficient heating and air-conditioning equipment often costs more, but their higher price tags can be reduced by incentives available from governments and utility companies.

Below are the programs that we could identify as of November 2022. Check Energy Star’s website for up-to-date info. Also check with your utility company and the Database of State Incentives for Renewables & Efficiency (DSIRE).

Before starting a project, confirm you qualify. Some programs require homeowners to work with utilities’ “approved” contractors or to file paperwork before installations occur to get rebates.

We didn’t include low-interest loan programs, which are most often available for new home construction. We also didn’t look for community grants for multi-home projects or incentives for commercial buildings. There are also numerous programs available to landlords of apartment buildings.

Starting in 2023, there are two federal incentive programs.

The “Energy Efficient Home Improvement Credit” revives expired tax credits for homeowners who make green improvements to their primary residences. The credit is equal to 30 percent of the cost of eligible improvements made between 2023 and 2032, with the following maximum allowable credits:

  • Air-source heat pumps and heat-pump water heaters—$2,000 for most systems
  • Biomass stoves and boilers—$2,000
  • Central ACs—$300 for most systems
  • Gas and oil furnaces—$150 for units with 95+ AFUE
  • Energy audits—$150
  • Air-sealing improvements—$600
  • Insulation—$500
  • Exterior doors—$250 per door, $500 limit for multiple doors
  • Windows and skylights—$600

Except for heat pumps and biomass stoves and boilers, for the projects listed above there’s a maximum tax credit of $1,200 each year. If your credit is higher than $1,200, or if you pay less than $1,200 in income taxes for that year, you can roll over excess credit amounts to future tax years. If you buy a qualifying heat pump, biomass stove, or boiler, the annual tax credit cap for that year gets raised to $2,000.

There are also 30 percent federal tax credits for residential solar energy projects (including storage batteries) and ground-source heat pumps, with no caps on total credit amounts. In 2033, these credits drop to 26 percent and then to 22 percent in 2034; after that, they’ll disappear unless new legislation gets passed.

There are also local incentives for solar-energy projects. Click here for our advice on buying solar energy systems.

Starting in 2023, there are also federal rebates available from the new “High-Efficiency Electric Home Rebate” program. These aren’t tax credits; they’re point-of-sale rebates that homeowners will receive as discounts as they make approved improvements.

These rebates are tied to household income. To get the full rebate amount, your household income must be less than 80 percent of the Area Median Income (AMI); if your household income is 80 percent to 150 percent of the AMI you can get 50 percent of each rebate amount; households with AMIs higher than 150 percent do not qualify for the program.

As of this writing, this program hadn’t been finalized. The law requires the Department of Energy to provide guidance to states and then each can set up its own program. Some states might add energy efficiency or other standards; some might reimburse contractors vs. operating rebate banks.

Those with household incomes less than 80 percent of their AMI will qualify for the full following rebate amounts, listed below; those with incomes between 80 and 150 percent of their AMI can qualify for 50 percent of these amounts:

  • $8,000—heat pumps when installed to replace existing gas-, oil-, or propane-burning furnaces or baseboard heat as the home’s sole heating source
  • $1,750—heat pump water heaters
  • $840—heat pump clothes dryers
  • $840—replace gas stove with electric model
  • $1,600—insulation, air sealing, and ventilation improvements
  • $4,000—electrical panel upgrade if needed to power above improvements
  • $2,500—electrical wire upgrades if needed to power above improvements
  • $2,000—air sealing, insulation and other retrofitting projects that reduce home’s energy usage by 20 percent or more; $4,000 if they save 35 percent or more

For households that make more than one improvement, there is a maximum $14,000 rebate.

Confused by all this? We were, too! Rewiring America built a brilliant calculator that can help estimate what you’ll likely qualify for.
 

Resources

Home Energy Saver pro
Tool from the U.S. Department of Energy that estimates cost vs. benefit of making various energy-saving improvements; we found using the “Detailed input” option helped generate the most accurate assessments

Energy Star
Certifies energy-efficient appliances and HVAC equipment

Rewiring America
Nonprofit that advocates for energy efficiency, especially through electrification projects.

Database of State Incentives for Renewables & Efficiency
Rebates and tax incentives available from utilities and governments

Efficient Windows Collaborative
Help with window selection and estimating cost savings

National Renewable Energy Laboratory
Research and publications on renewables; offers a calculator that estimates energy production and cost of solar installations

Consumer Reports
Ratings of appliances, lightbulbs, window A/C units, etc.

Residential Energy Services Network
Certification for energy auditors

Passive House Institute U.S.
Certification and training for net-zero energy-use builders, contractors, and manufacturers

Zero Energy Project
Advice and lists of products and suppliers for home buyers, builders, and designers interested in net-zero energy-use homes

EPA WaterSense Rebate Finder
Database of available rebates for installing water-saving devices

Earth911.com
Tons of practical green tips, plus database on recycling centers and where to dispose of hazardous household waste

LocalHarvest
Fantastic for finding nearby farmers markets, CSAs, and other sources of locally grown food

National Resources Defense Council
Environmental research and watchdog group

YouTube
Thousands of DIY videos from experts (but also definitely-not-experts)