Resources, Rebates, and Tax Credits to Help You Go Green at Home
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.
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 government incentives.
Unfortunately, at the time of this writing, unlike many other utilities in the U.S., PG&E was not offering much in the way of rebates for residential customers who make energy-saving improvements, aside from a $50 rebate for installing a smart thermostat.
Some smaller utilities and local governments periodically offer rebates. For example, Marin County offers an $800-$4,500 rebate to homeowners who replace natural gas equipment with efficient heat pumps.
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).
Starting in 2023, there are two programs offering tax credits and rebates.
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
- 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. 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 for the Bay Area. 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.
According to Fannie Mae, the AMI for Alameda, Contra Costa, Marin, San Francisco, and San Mateo counties is $151,100; for Santa Clara County it’s $166,600; and for Napa, Solano, Sonoma, and Santa Cruz counties it’s $119,400. That means in most of the Bay Area, those with household incomes of less than $120,880 will qualify for the full following rebate amounts, listed below; those with incomes between $120,880 and $226,650 can qualify for 50 percent of the amounts listed below. For Santa Clara County the income cutoffs are $133,280 to $249,900.
- $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.