The Inflation Reduction Act (IRA) of 2022 represents the single largest investment in climate and energy in American history. That translates to billions of dollars back in homeowners’ wallets. 

The IRA includes critical provisions that incentivize everyday homeowners to adopt sustainable home solutions and realize the benefits of energy efficiency and electrification, while supporting sustainable job growth and a thriving clean energy economy. Over the next decade, more than 120 million American households stand to benefit from the suite of residential clean energy tax credits and rebates included in the law. 

What is the residential clean energy credit? 

The 30% federal residential solar tax credit, enables more homeowners than ever to install solar on their roofs and immediately start saving money on their energy bills. When paired with available state solar incentives and financing options that allow consumers to pay for their system over time, residential solar becomes even more attractive. 

For homeowners looking to replace their outdated HVAC system, install new windows, get a home energy audit, or purchase a number of other energy-efficient upgrades, the IRA also provides home improvement tax credits of up to $1,200 each year per household. Plus, an additional $2,000 tax credit for the purchase of a high-efficiency electric heat pump. 

Rebate amounts 

These and other policies are expected to positively impact household budgets in every zip code in the country. In all, the law will provide each American family with an average $10,600 in incentives to transition their home from fossil fuel to electric appliances, according to the think tank Rewiring America.  

Here is a handy breakdown of the rebates and tax credits available to a typical home: 

These policies could save American families  $1,800 per year on their energy bills. These savings will not only provide households with relief at a time of high inflation but the high efficiency and electric products supported by the IRA will allow households to gain more control of their energy expenses for years to come.   

As these provisions gain popularity and more households benefit from the upfront and long-term cost savings they offer, the demand for sustainable home upgrades and clean energy jobs will rise. It’s estimated that the IRA will create over 1.4 million direct new jobs and 5 million total new jobs by 2030, including opportunities for solar installers, home improvement contractors, and maintenance technicians. While the Inflation Reduction Act is still in its early stages, it’s clear the positive impact it will have on American households, communities, and the acceleration of the adoption of sustainable home upgrades.