These are answers to questions HEC received during Save Money. Take Action. Confront Climate Change.

Please refer to our Inflation Reduction Act page for relevant energy savings links and programs.

Homeowners

Q1. How can I benefit from this act if I install solar panels on my house?

A1. Under the Residential Clean Energy tax credit of the IRA, homeowners who install solar panels can receive a 30% tax credit on their income taxes. The 30% tax credit is not limited by household income, has no annual or lifetime dollar limit, can be claimed each year qualifying items are installed, and can be carried over to future tax years (will decrease your tax liability each year until full credit is applied).

The following residential clean energy expenditures are also eligible for a Residential Clean Energy Credit of 30% of the cost:

  • solar water heating property expenditures (solar water heaters)
  • fuel cell property expenditures
  • small wind energy property expenditures (wind turbines)
  • geothermal heat pump property expenditures
  • battery storage technology expenditures

* Reminder: Commonly listed as the Residental Clean Energy Property Credit, please do not confuse this for a credit on your property taxes. “Clean Energy Property” is a generic term used to cover equipment eligible for this tax credit. But, it is a federal income tax credit NOT a state property tax credit.  

Q2. Do roofing upgrades qualify for the Residential Clean Energy Tax Credit?

A2. Roofing upgrades do not qualify for the clean energy credit, because it counts as a structural upgrade. However, solar roofing tiles and solar roofing shingles do qualify for the credit, because they generate electricity for the home.

Q3. How and when does a homeowner apply for the IRA tax credits?

A3. Homeowners can claim qualified IRA tax credits from 2022 through 2032. When you are filing your tax returns, make sure to keep all receipts and records of your purchases. Visit the IRS website to download the most up-to-date IRA tax credit forms.

*Landlords who serve low to moderate-income renters may qualify for the forthcoming Home Energy Rebate program which includes significant savings on appliances and building improvements.

Q4. Are there restrictions if I use my home for my business?

A4.Yes, if you claim a portion of your home as a business expense, there are restrictions on the Residential Clean Energy Credit. If your portion claimed for business purposes is:

  • Less than 20% of the home: Full credit amount of 30% may be claimed
  • More than 20% of the home: Credit is based on expenses unrelated to business use

Q5. My gas furnace is only about 10 years old, the IRA incentive will likely be expired by the time it needs replacing.  What do you recommend?  Is there a calculation that can be done?

A5. Get a blower door test to see if there are improvements that you can do to better weatherize your home.  Check out your utility’s programs and see what else can be done in your home:

Contact Solarize Indiana to receive calculations based on the options available at solarizeindiana@gmail.com​

Q6. Condominiums, multi-family homes, and HOAs pose a unique challenge for the use of the IRA tax credits. Do you have any suggestions?

A6. There are forthcoming rebate opportunities on many energy-efficient appliances that multi-family homes, condos, and individuals in restrictive HOAs could utilize. Special rebate opportunities for low and moderate-income (LMI) individuals or landlords serving at least 50% LMI are expected to become available in 2024. Many of these potential upgrades do not need approval.

For condos, begin by asking about certain improvements such as asking building managers if they can invest in shared EV chargers for the building. Additionally, you can work to create an approved list of doors and windows in order to take advantage of the Energy Efficient Home Improvement Credit.

HEC is also working to advance community solar so anyone can have access to clean energy. Join our e-newsletter list and visit Hoosiers for Community Solar.

Q7. Can landlords claim the residential home energy credits on their properties?

A7. Landlords cannot claim the Energy Efficient Home Improvement Credit or the Residential Clean Energy Credit as the home must be your primary residence. However, individuals with multiple homes may claim the credit as long as they do not rent it to others.

Q8. Is there a dollar limit on the Residential Clean Energy Credit?

A8. No, there is no overall dollar limit for the Residential Clean Energy Credit. The credit is generally limited to 30% of qualified expenditures made for property placed in service beginning in 2022 through 2032. However, the credit allowed for fuel cell property expenditures is 30% of the expenditures up to a maximum credit of $500 for each half kilowatt of capacity of the qualified fuel cell property. In the case of a residence or dwelling unit that is jointly occupied by two or more individuals, the maximum amount of such fuel cell property expenditures used to calculate the total Residential Clean Energy Property Credit amount for all individuals living in that dwelling unit during a calendar year is limited to $1,667 for each half kilowatt of capacity of qualified fuel cell property.  

Appliances, Energy Efficiency, and Energy Assessments

Q1. Do some of the IRA tax credits for electrification and efficiency upgrades have annual dollar caps? Is there a way to spread projects over several years to maximize those credits? 

A1. Yes, the Energy Efficient Home Improvement Credit has a maximum annual amount of $3200 for qualifying upgrades. The annual maximum can be broken down into two categories of items:

  • $1200 for doors ($250 per door, $500 total), windows (up to $600), and energy audits (up to $150)
  • $2000 for heat pumps and biomass stoves or boilers

You can stagger these improvements because the credit does not have a lifetime dollar cap. You can claim the credit every year a qualifying improvement is made until 2033. *Also the credit is nonrefundable (cannot get back more than you owe in taxes) and cannot be carried over to future taxes.

Q2. HVAC installers I’ve talked with in Indianapolis say heat pumps do not heat well at temperatures below 30 degrees. They say you need a secondary source of heat, either electrical “packs” or a gas furnace.

A2. Solarize Indiana has experienced heat pumps operating at -13F. They may be citing old industry information. Contact Solarize Indiana on how to best talk with contractors at solarizeindiana@gmail.com.

Q3. We’re interested in having an energy assessment done on our home to get a sense of the cost and options available. Are there companies you’d recommend for this service?

A3. Consider taking advantage of your utility’s energy efficiency programs for discounted items and services for your home or business to lower your bills.

Drivers

Q1. What electric vehicles (EVs) qualify for the Clean Vehicle Credit?

A1. New, used, and commercial clean vehicles qualify for the Clean Vehicle Credit. You can search for which clean vehicles qualify and the credit amount at www.fueleconomy.gov.

*There is no limit to the number of credits claimed by businesses or tax-exempt organizations.

Q2. What kinds of upgrades may my home need to support EV charging?

A2. Most vehicles come with a level 1 charger which in most homes can be plugged into a standard 120V outlet. If you have a detached garage or have no access to an outdoor outlet, you will have to hire an electrician to make this available. Level 1 chargers are ideal for overnight charging and short commutes.

If you want the ability to charge your EV in 4 to 6 hours, you can invest in a level 2 charger which is the fastest charger available for home use. Level 2 chargers require a 240V outlet which is similar to the outlet required for dryers. Level 2 chargers are ideal for daily charging and long commutes.

  • You can claim 30% of the total cost (hardware and installation) up to $1000 for a charging station and bidirectional (two-way) chargers.

Depending on your residence, you may require electrical upgrades such as an electric panel or circuit upgrades. You may claim 30% of the cost up to $600 for these electrical upgrades under the Energy Efficient Home Improvement Credit. These types of upgrades are beneficial for other electrification home upgrades such as induction cooktops.

Q3. Are there income limits to the Clean Vehicle Credit?

A3. Yes, the credit has the following income limits:

NEW CARS
  • Single taxpayers: $150,000
  • Heads of household: $225,000
  • Joint filers: $300,000
USED CARS
  • Single taxpayers: $75,000
  • Heads of household: $112,500
  • Joint filers: $150,000

*Beginning in 2024, buyers will be able to transfer the clean vehicle tax credit to dealers at the time of sale and use the credits as a down payment. Guidance is expected to be released at the end of 2023.

Q4. If someone claimed a used clean vehicle credit on my vehicle before, can I also claim it?

A4. No, a used clean vehicle credit can only be claimed once on a used vehicle.

Renters

Q1. Are there any opportunities available to renters?

A1. Yes, renters also qualify for new opportunities to save on their energy bills, upgrade their spaces, and achieve energy independence while saving money. However, the incentives available will depend on the type of property, lease agreement, and budget. There are forthcoming rebate opportunities on many energy-efficient appliances that renters could utilize. Special rebate opportunities for low and moderate-income (LMI) individuals or landlords serving at least 50% LMI are expected to become available in 2024.

Other opportunities to get involved in:

  • If you are thinking of making a new vehicle purchase, consider checking out the Drivers incentives to save on a new clean vehicle.
  • Advocate for community solar to get access to solar projects in your community without owning a home.
Home Efficiency Rebates

Q1. Can I claim the Energy Efficient Home Improvement Credit tax credits and the home efficiency rebates?

A1. You may qualify for both the tax credit and the rebate program, but you cannot receive a rebate on a qualifying item and claim the tax credit on the same item. For example, you cannot receive a rebate on your heat pump and claim a tax credit on the same heat pump.

Q2. Are there any updates on when the rebate programs will be available?

A2. The State Energy Office is still waiting on guidance from the federal government for these programs. Sign-up for HEC’s e-newsletter to receive updates on this program.

Nonprofits

Q1. How can nonprofit organizations benefit, if the only financial incentive is tax credits?

A1. Tax-exempt organizations under 501(c) and religious organizations under 501(d) are eligible for elective pay or “direct pay” opportunities for clean energy and commercial clean vehicle tax credits. These opportunities are currently temporary and will be finalized after a public comment period.

For clean energy grant opportunities, Renew America’s Nonprofits is open to 501(c)3 organizations aiming to lower energy costs while improving the safety of the buildings they own and operate. Discover other grant funding opportunities to lower your emissions and utility costs by visiting the Climate Program Portal.

Q2. Are there ways for a non-profit, such as a church, to receive financing for a new installation of air heat pump heating and cooling? 

A2. Renew America’s Nonprofits is open to 501(c)3 organizations aiming to lower energy costs while improving the safety of the buildings they own and operate. Currently, grant organizers or “prime recipients” are being selected. Once prime recipients are finalized, funding notices for sub-recipients will be open, stay tuned for more updates.

Businesses

Q1. What opportunities exist for new construction and land management in terms of funding opportunities? 

A1. Credits exist for builders of energy-efficient homes with single-family homes qualifying for $5000 and multi-family homes qualifying for $1000 per unit. The Energy Efficient Commercial Building Deduction under section 179D can provide businesses with significant tax deductions for the construction of buildings that are fitted with energy-efficient improvements including apartment buildings above three stories. Buildings must reduce energy costs by 25% according to ASHRAE standards.

Have more questions? Send requests for additional information to IRA-Answers@hecweb.org

Contributors: Delaney Barber and Max Suess

A special thanks to all the speakers of Save Money. Take Action. Confront Climate Change. and Mike Mullett for his contributions to the Q&A .

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