How the Inflation Reduction Act could cut your energy bills

Here are the big points about the new Inflation Reduction Act:

Gas out, electricity in.

This is because replacing both natural gas and gasoline with electricity generated from clean renewable energy would significantly reduce carbon emissions and improve air quality. While residential home energy use is the third largest consumer of energy in the US Gasoline-powered vehicles are the largest source of greenhouse gas emissions overall, Most of us know this and want to do more to use less gas. But the cost of switching from gas to electricity has stopped many of us from doing so. That’s why Inflation Reduction Act Such a game changer. By offering a variety of financial incentives, it will help millions of people like us cover at least part of the cost of transitioning from gas to electricity.

EDF has put together this excellent guide It explains how the Act reduces the cost of replacing specific appliances like water heaters, stoves, solar panels, and even electric vehicles. But getting started with it all can still be a little daunting. To understand this, here’s what I do that can help you do the same.

First, understand the difference between tax credits and exemptions, which are the two primary ways the bill helps cover your costs.

tax credits Reduce your total tax payment when you file your taxes. For example, let’s say you owe $200 in taxes. If you get a $100 tax credit when you buy a new electrical appliance, you can apply it to your tax bill and then pay only the $100 in taxes. The more taxes you pay, the more tax credits you can get to help reduce them. Just be aware that if your tax credit exceeds your taxes owed, you won’t get a refund based on the excess credit.

Discount Payment is made to the taxpayer regardless of the taxes owed. In fact, the exemption has no impact on taxes. Instead, they reimburse you for the purchase price when you buy an item. For example, My electric utility offers rebates to encourage people to buy more efficient electric refrigerators, When I bought one and sent them proof of my purchase, they sent me a check for $150 (plus $50 to recycle the old device). The rebate neither reduced nor increased my taxes, but it offset the actual cost of my fridge. You claim the rebate when you make a purchase, not when you file your taxes. The exemption is not taxable income.

Does your family’s shopping qualify for rebates or tax credits? How should you prioritize your shifts, especially if you have a lot of equipment to replace?

Start with actions that will reduce the amount of energy used in your home overall, The act provides a rebate of up to $150 to help homeowners pay for an energy audit that will tell them two things: where energy is being lost and what is needed to stop it. When I got myself audited, I discovered that my leaky attic was the reason my winter heating bills were so high. The audit determined how much insulation I needed to add to make a difference.

We’ve made it easy to get started by creating a list of energy-saving products in our Amazon store. To keep an eye!

Next, make a list of your own gas-to-electricity preferences, Is your gas furnace on its last legs? Do you need a new water heater? Is your clothes dryer broken? If you must replace those devices anyway, make them a priority.

In the meantime, learn about highly efficient heat pump technology, I knew that electric heat pumps could replace gas-burning furnaces, but I didn’t realize that heat pumps—for clothes dryers, water heaters, and traditional air conditioners—use up to five times more energy than heat pumps. use – even existed, let alone eligible for various exemptions.

Ask an Electrician Before Buying Do you need to upgrade your electrical panel? Recently an electrician gave me an estimate for Replace my gas stove with an induction cooktop and electric oven, They said my panel is fine, but they will need to install a new 240 volt outlet to replace the old stove’s existing 120 volt outlet. Know what your new device will need to choose the best option. it Guidance from Consumer Reports This may help you consider your options if you’re looking to purchase a new electric range.

Set a timeline. You don’t have to turn off every device at once, so you can set a timeline based on your preferences and your budget. If your goal is to electrify your entire home, this may take a few years. Don’t worry. This Act is applicable till 2032.

it simple Calculator from Rewiring America This will help you estimate how much money you can get by using the incentives available in the Inflation Reduction Act. Rebates and tax credits won’t cover the full cost of what you purchased. However, the remaining expense will be compensated annually through energy savings over time.

Rewiring America estimates that “homes that get a heat pump, an EV for space and water heating, and put solar on their roof save $1,800 a year on energy bills.”

All of these savings can potentially help your family for years to come.

Look for future posts on specific areas like heating and appliance replacement, so you can take full advantage of the Act.

Note: This post was originally written for Maa Clean Air ForceA powerful organization that unites mothers to protect their families and the environment.