There is one revived tax credit program for energy efficiency and two new rebate energy efficiency programs in the IRA.
The tax credit program, now called the Energy Efficiency Home Improvement Credit, had lapsed. It has been revived and made retroactive to 2022, although with only limited benefits: 10% tax credit on qualified efficiency measures with a $500 lifetime cap. Beginning in 2023, the tax credit increases to 30% and the lifetime cap on benefits is replaced with a cap of $600 per measure, and a $1,200 annual cap. Exceptions to these caps are included in the chart below.
Eligible services and home improvements must be highly rated by Energy Star or other rating system, and include:
|Heat pumps and heat pump water heaters ($2,000 credit)|
|Insulation and air sealing|
|Energy audits ($150 tax credit)|
|Energy-efficient HVAC systems (including furnaces, boilers, and central AC)|
|Electrical panel upgrades; must be at least 200 amps capacity|
|Energy-efficient windows and doors ($500 tax credit for doors)|
The High-Efficiency Electric Home Rebate Program is one of the two new energy efficiency rebate programs. This one focuses on electrification. It provides rebates (not tax credits) to low-income homeowners for 100% of the amount listed below for installing electrical upgrades:
|Heat pump water heater||$1,750|
|Heat pump for HVAC||$8,000|
|Electric stove or heat pump clothes dryer||$840|
|Electric service upgrade||$4,000|
|Insulation and air sealing||$1,600|
Low-income homeowners are defined as households that earn less than 80% of the area median income as determined by the US Department of Housing and Urban Development (HUD) (see the chart below). Multi-family properties qualify if 50% of the residents meet this income requirement.
Moderate-income households qualify for 50% of the maximum benefit listed above. For example, a moderate-income family could receive a rebate up to $4,000 for installing a heat pump. Moderate-income households are defined as earning between 80% and 150% of the area median income as defined by HUD (see the chart below). Households earning more than 150% of the median income do not qualify for rebates under this electrification program. Multi-family properties qualify if 50% of the residents meet these income requirements.
According to the HUD website, estimates for what 80% and 150% of the median income for West Virginia in 2021 for various household sizes are shown below. Please note that these are 2021 figures and will change. And they represent the best data available and should be considered estimates.
|Household Size||80% of the median income in West Virginia||150% of the median income in West Virginia|
The second energy efficiency program in the IRA is the HOMES program, and is a more traditional energy efficiency program. It provides rebates for the cost of a project depending on how much energy is saved through the project.
- For retrofits that are projected to save 35% or more of the household’s energy, the rebates are $4,000 or 50% of the project costs, whichever is less. The benefits increase to $8,000 or 80% of the cost of the project whichever is less for households earning less than 80% of the area median income.
- For retrofits that are projected to save between 20% and 35% of the household’s energy, the rebates are $2,000 or 50% of the project costs, whichever is less. The benefits increase to $4,000 or 80% of the cost of the project whichever is less for households earning less than 80% of the area median income.
- For retrofits that achieve energy savings of at least 15%, they will receive “a payment rate per kilowatt hour saved…equal to $2,000 for a 20% reduction of energy use for the average home in the state.” Benefits increase for households earning less than 80% of the area median income.
Benefits from these two energy efficiency programs cannot be combined. Both programs will be run by the state. The state will need to submit a draft program to the US Department of Energy for approval before benefits will be available. It is unclear how soon that will happen.
 See https://www.huduser.gov/portal/datasets/il/il2021/2021summary.odn?inputname=STTLT*5499999999%2BWest+Virginia&selection_type=county&stname=West+Virginia&statefp=54.0&year=2021
 I have no idea what this language means. But it is verbatim from the IRA statute.