Inflation Reduction Act (IRA) Part 2: What’s in it for local governments and consumers?
By: Robert Marino | TCAT Director of Clean Energy and Infrastructure
Earlier this year I wrote a broad overview about the IRA. This piece goes deeper into the IRA specifics: what dollar amounts you might expect to save if you did an energy efficiency project on your home or bought an electric vehicle. Let me remind you that rulemaking for the largest climate bill on Earth is still being worked out, so details about which municipalities and departments will be administering these funds are still to be determined to some degree.
In this blog post, author Amy Turner highlights several ways for local (and state) governments to access IRA funds.
- Direct financial support from a federal agency.
- Direct to consumer tax credits and grants for vehicle and building electrification, as well as rooftop solar. An important job of local governments will be to help educate residents about these opportunities.
- State energy offices will administer two funds of particular relevance: HOMES, a program for energy efficiency rebates, and HEERA, a building electrification rebate program for electric appliances and home electrical system upgrades (see below for more details). From the blog: “While the details of state programs will not be known until applicable state agencies develop them, there is significant room for coordination and advocacy by local governments to state policymakers.”
- Competitive grant funding for port decarbonization: zero-emissions equipment and technology as well as climate action planning through Sept 30, 2027.
- Several parts of the IRA have funds specifically for disadvantaged and low-income communities.
In addition, there is The Green Bank (aka Clean Energy Accelerator aka Greenhouse Gas Reduction Fund). Twenty billion dollars in IRA funds (plus another $7 billion from other sources) will be available from the US Environmental Protection Agency to create loan programs across the country for projects that will avoid greenhouse gas emissions and other kinds of air pollution. Funds are through competitive grants to states, cities, Tribes, and nonprofits who can then offer loans and or technical assistance. These funds are primarily for low-income and disadvantaged communities.
Now let’s examine a few opportunities for consumers and homeowners in more depth. If you want to play with costs and rebate amounts based on upgrades you might make to your house, see this Rewiring America calculator.
HOMES (Home Owner Managing Energy Savings).
This program for energy efficiency upgrades in houses and apartments will likely be run through the Washington State Department of Commerce. There are no income limitations and the program applies to both houses and apartments. It is only available for retrofits, not new construction. Funds will need to be spent by September 30, 2031.
- Up to $8,000 in home-energy rebates
- If you cut energy use by 20% you can get up to 50% of the cost or $2,000, whichever is less.
- If you cut energy use by 35% you can get up to 50% of the cost or $4,000, whichever is less.
- Rebate amounts are doubled if you make 80% or less of area median income.
- These rebates cannot be combined with other Federal grants or rebates.
HEERA (High-Efficiency Electric Home Rebate Program). This program will also likely be run through the Washington State Department of Commerce. It is geared toward low and moderate income (LMI) households. HEERA rebates can be used for new or existing construction.
- Up to $14,000 altogether from HEERA
- Heat pump for space heating and cooling $8,000 max
- Heat pump water heater $1,750 max
- Electric stoves and heat pump clothes dryers $840 max
- There are additional rebates for non-appliance improvements as well
- If you make below 80% of area median income you can get rebates for the total cost of your expenditures, up to $14,000
- If you make between 80% to 150% of area median income you can get rebates for 50% of your costs, up to $14,000; If you make over 150% you are not eligible. The AMI for Thurston County was $81,693 in 2021; 150% of that was $122,539.50.
Electric Vehicle Tax Credit for new vehicles
- $7,500 tax credit for new electric vehicles through 2032
- Maximum income: $150,000 individual, $300,000 couple
- Maximum price: van, SUV, pickup: $80,000; other vehicles: $55,000
- There are requirements for where the vehicle and battery are sourced and built which will limit the availability of this tax credit for the next few years.
Electric Vehicle Tax Credit for used vehicles
- $4,000 tax credit or 30% of the sale price, whichever is less
- Maximum income: $75,000 individual, $150,000 couple
- Maximum price: $25,000
- Qualifications: Only applies to the first sale of the vehicle, can only get this credit once every three years, vehicle must be at least two years old
- Only available through dealerships
Additionally, there are existing programs that can help pay for energy efficiency in your home such as the Weatherization Assistance Program (WAP). For a great summary of some of these programs, as well as other programs in the IRA, go here. If you want to learn more about TCAT’s work please contact .