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Earlier this week, President Biden signed the Inflation Reduction Act into law. Over the next ten years, the federal government is set to invest $370 billion to combat climate change. This broad-reaching plan includes initiatives to boost green energy production, enhance industry efficiency, expand the Affordable Care Act, and much more. But let’s put the wider societal effects aside for a moment: You might just qualify for a free stove and an affordable electric car through the IRA.
What rebates can you expect from the Inflation Reduction Act?
While the exact timing of IRA-based rebates hitting stores is still uncertain—there are a lot of details to finalize—over the coming years, consumers, especially those with low to moderate incomes, will likely benefit from point-of-sale rebates on a variety of appliances and home improvements. For example, you could save $1,750 on a heat pump-enabled water system, or get up to $840 off an electric/induction range to replace a gas stove. Depending on your income and your choice of cooktop, this might even mean a free major appliance.
The IRA also provides funding to upgrade your home’s electrical system to support new electric appliances, with tax credits of up to $4,000. It’s still unclear if replacing an old electric stove with a new one will qualify for the same rebates, as the funds will be allocated by the states. Be sure to check this site regularly for updates on your state’s clean energy programs, and stay informed about your state government’s decisions.
The main goal is to reduce the upfront cost of more energy-efficient appliances for consumers, but that’s just the start. On average, households are expected to save between $175 and $220 annually due to lower energy bills and reduced costs for goods and services. If you upgrade to an electric heat pump furnace, a more efficient water heater, install rooftop solar panels, and switch to an electric vehicle, you could cut your annual energy costs by $1,800.
It’s difficult to predict exactly how much anyone could save from the IRA’s provisions. Factors like income, location, homeownership status, and more will affect the final amount, and the details are still being finalized. However, you can use this calculator from Rewiring America to estimate the specific savings you might be eligible for.
Can you get a deal on an electric car?
Unfortunately, the government isn’t giving away electric cars like Oprah, but they are extending a pre-existing tax credit for electric vehicle purchases. The electric car tax credit will likely be $7,500 for new cars, helping ease the sticker shock of buying one. For the first time, buyers of used vehicles will also be eligible for a tax break, up to $3,750.
Electric cars are already cheaper to drive and maintain compared to gas-powered vehicles, and upcoming improvements to the energy grid are set to make charging even more affordable. Plans include adding half a million new charging stations to the grid as well.
However, the electric car landscape isn't without its challenges. Automakers have expressed concerns that the sourcing requirements outlined in the IRA could exclude some U.S. cars from qualifying for certain rebates and credits, and many cars currently eligible for rebates might no longer qualify in 2023. Like many other aspects, the specifics of which cars will qualify for what kind of incentives are still undecided. The IRS has until the end of the year to finalize these details.
How corporations will maneuver to funnel the money intended for consumers into their own pockets remains unclear, but if I had to wager, I’d bet it will happen.
