Save Some Green When Going Green!
How Homeowners Could Save Thousands with Tax Credits, Rebates, and Exemptions When They Adopt Clean Energy
It’s well-known that clean energy is now less expensive than traditional energy. “Going green” takes time and money, but homeowners who are concerned about the upfront cost of buying clean energy products need not worry! There is a multitude of government clean-energy programs that make the process far more affordable than ever before. Here’s how energy-smart homeowners can find great deals and unadvertised benefits.
The Inflation Reduction Act Changed the Game
Starting at the federal level, homeowners who will owe taxes can receive a tax credit for 30% of the cost of a new solar energy system purchased and installed in the same year. The IRA also offers 30% — and even up to 100% — in tax credits and rebates for eligible homes that install a money-saving heat pump for heating and cooling, a heat pump clothes dryer, a heat pump water heater… or all three.
Tax credits for new and used electric vehicles come in at $7,500 and $4,000, respectively. There are even tax credits for adding insulation and weather stripping. Visit Whitehouse.gov to learn about all the incentives and follow the guides for applying.
Homeowners who want to focus their budget on the biggest needs can hire a home inspector to do an energy audit on their house. The IRA offers a $150 tax credit for the cost of the audit.
Talk to a tax advisor before making purchases to find out if you can take advantage of credits.
DSIRE is an Amazing Tool for Finding Local Savings
Homeowners can look for more savings in the North Carolina State University DSIRE database. Just enter a ZIP code and scan through the list of business and residential incentives for clean-energy purchases. Be sure to filter for current residential or business programs. This comprehensive database includes links to state, local, and utility company tax credits and rebates that would help anyone more easily afford to go green. Search state government and utility company websites directly to make sure incentives are still available and to find instructions for applying.
Property and sales tax exemptions are another great way to save money. Check DSIRE for city and state rules for sales tax deductions and energy-efficient home property tax exemptions.
Energy Star Tax Credits and Rebates
Since 1992, Energy Star has partnered with thousands of manufacturers to make home and business products energy efficient. Backed by the federal government and in partnership with the Environmental Protection Agency, Energy Star-certified products have saved five trillion kilowatt hours of electricity and $500 billion, according to the website.
There are many Energy Star-certified products that can earn tax credits. The tax credit for air source heat pumps, for example, is $300 in addition to the IRA tax credit. Review the list using the dropdown menu, which also has instructions for how to apply.
Plug a ZIP code into Energy Star’s rebate finder to find tax credits and rebates for products you are thinking of buying or have already bought. Follow the links to learn how to apply.
Manufacturer Rebates and Promotions
Equipment sales and installation companies occasionally offer manufacturer rebates to their customers. When asking for bids, ask if there are any price reductions or rebates for specific models.
Any rebates that homeowners receive are not considered taxable income but must be deducted from the total cost of the product when applying for credits on tax forms.
Decoding “Special Offers”
By now, everyone has seen online ads for government-paid solar, free solar, or $0-down solar. Let’s set the record straight: There is no free solar.
Enticing ads for free- or government-paid solar capture sales leads. Then, salespeople contact homeowners to offer free solar. This is actually a type of lease agreement. The homeowner would not own the solar system, but they would pay for it. Any tax credits and rebates are taken by the sales company, not the homeowner.
$0-down solar means customers are not required to pay an upfront deposit at the time of purchase, but they are required to go through a credit check if they want to pay out-of-pocket or use financing. Alternatively, customers need a letter from a financial institution, such as Clean Energy Credit Union, affirming that they are pre-qualified for a loan up to a certain amount. Homeowners who use $0-down financing get to claim all the tax credits and incentives.
Similarly, companies selling heat pumps, electric vehicles, and appliances, may offer their own financing options or require proof of loan pre-approval.
A Brief Glossary
Wading through financial and tax terms can be… taxing. Here are a few definitions to clarify the lingo.
Tax deduction: Reduces your taxable income by a specified amount.
Tax credit: Reduces the amount of tax you owe at the end of the year. It can get complicated, so talk to an accountant to find out if you can use tax credits.
Rebate: A specified amount of money paid back or credited from a utility company, manufacturer, or government. Some rebates are automatic, and others require the buyer to fill out an online (or mail-in) form to receive a rebate check.
$0-down: No out-of-pocket money is required upfront to buy a solar system or other product. It’s not a cost reduction, but it can help some people purchase clean energy if the price is a barrier.
Adopting clean energy saves money in the long run, but it can feel expensive at first. Homeowners who are willing to spend time looking for ways to save money through government incentives and even low-interest loans will discover they really can afford to go green.
Our mission is to make clean energy accessible to more people. Whether you’re building your dream home or investing in your existing home, a Clean Energy Credit Union customized home-improvement loan can finance the energy-efficient upgrades you need to save money and live your values.