Name: Rebates Could Save Homeowners Thousands on Energy-Efficient Upgrades
Uploaded: 2023-08-24T00:29:00Z
Duration: 6 min 35 s
Description: Homeowners planning energy-efficient renovations could save substantial amounts of money through rebates the government plans to roll out this year. WSJ personal-finance reporter Ashlea Ebeling joins host J.R. Whalen to discuss what types of work the rebates do, and don’t, cover. Photo Illustration: Elena Scotti

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Homeowners planning energy-efficient renovations could save substantial amounts of money through rebates the government plans to roll out this year. WSJ personal-finance reporter Ashlea Ebeling joins host J.R. Whalen to discuss what types of work the rebates do, and don’t, cover. Photo Illustration: Elena Scotti

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Rebates Could Save Homeowners Thousands on Energy-Efficient Upgrades

J.R.: Here's "Your Money Briefing" for Thursday, August 24th. I'm J.R. Whalen for "The Wall Street Journal." A new round of energy efficiency rebates coming later this year could save people some serious cash who are planning renovations to their home. "Wall Street Journal" personal finance reporter, Ashley Ebeling joins me with details. So, Ashley, what will these rebates cover?

Ashley: There are two rebate programs. One's for specific items, everything ranging from an induction cooktop to an energy efficient dryer. The other program is for a whole house redo. So say you put in insulation or a new heat pump that works for heating and cooling and it reduces your energy costs by 20 to 35%, then you can get a lot of money back.

J.R.: So what kinds of things aren't covered?

Ashley: Well, it's not just, oh, redo your house and buy any old air conditioning unit or put on a new roof. It has to have energy efficient characteristics, so Energy Star ratings. The point of sale contractor is gonna be able to help you to see whether the items actually qualify for the rebates or not.

J.R.: Who's eligible to receive the rebates?

Ashley: There's something for everyone, really. Lower income households are going to actually get 100% of costs covered for some things, and then they change depending on the level of income. But even for high income folks, there're rebates too.

J.R.: But why is the government rolling these rebates out?

Ashley: It was last year's Inflation Reduction Act. It's nearly $9 billion in rebates that are going to consumers. And the idea was to boost conversion of, like, our current housing stock is really poorly constructed for energy efficiency. So the point is to convert more homes to electric and energy efficient technologies. And that's, like, especially important now because with the high temperatures and other extreme weather, that's raised the cost of cooling and heating and powering homes.

 J.R.: A lotta times, these rebates, it sort of varies by state how much money people will save. Is that the case here?

Ashley: It's interesting 'cause it's a federal program, right? It was Congress put this together, but they're having the states roll it out because what's energy efficient in Texas might be different than Alaska. So each state gets a set amount of money, and then they design their specific rebate program. So it'll be important to look at what your state's rolling out specifically.

J.R.: Now, earlier this year, you reported on tax credits that are available for things like heat pumps and electric vehicles. How do they fit into this rebate program?

Ashley: So that's key. The tax credits are all still there. The Inflation Reduction Act actually enhanced a lot of those, and they can be stacked on top of the rebates. For the tax credits, that's a dollar for dollar savings, basically. And homeowners can get up to $1,200 for things like insulation. They get up to $2,000 for heat pump, 30% of costs for solar. So yeah, the savings really adds up.

J.R.: So on top of the rebates saving people money, why are they doing this?

Ashley: So it's not just the upfront savings. The goal is to make your home more comfortable and more energy efficient, and you're saving going forward on your running costs for the home. But experts also say that these improvements add value to your house, you know, eventually for resale.

J.R.: Now let's talk about how households can maximize the money they save. Oftentimes, a clean energy audit is recommended. What goes into that?

Ashley: So that's a really good first step, and the laws put in the incentive, a $150 tax credit for homeowners to do a home energy audit. And it's actually required for the whole house retrofit rebate. So the Internal Revenue Service just put out guidance on that, saying that if you're doing it this year, you can go ahead, but by next year, they're gonna have certain certification standards for the contractors doing these home energy audits.

J.R.: If somebody wanted to do several clean energy improvements, how should they plan that?

Ashley: Typically, experts say that it's best to start with the energy efficiency improvements, like making sure you're well insulated and have good windows and doors, and then turning to the HVAC system. But obviously, if your air condition's broken, you have to do it right away, so at that point, dive in. Try and look at the whole house picture, but make sure you're getting the right energy efficient equipment.

J.R.: You know, this whole thing with all the projects and the numbers, this can get kind of unwieldy for people. Are there online tools to help people map out the projects and the costs?

Ashley: They're these new free apps. One that I really liked is called Pearl Certification, and they have something called the Green Door app. So you can find it either on their website or on your phone, and it guides you through these high performance renovations, everything from picking a contractor to searching for rebates. And then there's another one at Rewiring America, and they have it pegged as an Inflation Reduction Act calculator. You can plug in your family income and zip code, and then that gives you a list of what rebates and tax credits are available.

J.R.: How do people apply for or claim these rebates and tax credits, and is there a deadline for applying?

Ashley: So the good thing is the law made these good for 10 years through 2032. You could do one thing one year. Say you put in your new front door one year and then you can insulate your attic the next year. It's an annual credit. And then the rebates also are there for that period of time. Some people are saying it's possible they'd run out, so maybe you wanna do it sooner rather than later. You know, we'll see. And the tax credits, you claim on your tax return the following year after you do the work. The rebates, in most cases, are gonna be at the point of sale.

J.R.: Anything else people should know about the program before they apply?

Ashley: Double check the income limits, and make sure you've got the right products for your house. And that kinda goes back to doing the whole home energy audit to make sure that within your budget, you're putting these energy efficiency dollars in the right place.

J.R.: That's "Wall Street Journal" personal finance reporter, Ashley Le Ebeling. And that's it for "Your Money Briefing." Today's show was produced by Ariana Aspuru with supervising producer, Melanie Roy. I'm J.R. Whalen for "The Wall Street Journal." We'll be back tomorrow morning. Thanks for listening.

WSJ's Your Money Briefing podcast is your personal-finance and career checklist. Finance reporters and experts break down complicated money questions every weekday to help you make better decisions about managing your money. 