Inflation Reduction Act (IRA)

Learn more about the Inflation Reduction Act and how it and other legislation can help you save money on energy bills through rebates, tax credits, grants, and other energy assistance programs. The objectives of this funding are to reduce the State’s greenhouse gas emissions and energy costs for consumers. The Inflation Reduction Act is expected to save American households up to $1,000 per year on their energy bills and put the U.S. on track to reduce emissions by 40 percent in eight years.

Highlights from the Inflation Reduction Act:

  • The Energy Efficient Home Improvement Credit (Section 25C): The Inflation Reduction Act allows consumers to claim a credit for up to 30 percent of the cost of qualified energy efficiency improvements, including up to $2,000 for biomass stoves and boilers, and expands the credit to cover home energy audits.
  • The Home Owner Managing Energy Savings (HOMES) Rebate Program: The Inflation Reduction Act provides rebates—discount deducted during purchase—beginning in 2023 for homeowners who retrofit with efficiency upgrades.

The Infrastructure Investment and Jobs Act (IIJA) is intended to transform funding to support weatherization and clean energy projects across New Hampshire this year. Moreover, Congress has made historic investments in the Low Income Home Energy Assistance Program (LIHEAP), which provides financial assistance to low-income households struggling to afford their energy bills. As a result of this effort, New Hampshire received more than $94 million in LIHEAP funding in fiscal years 2021 and 2022, nearly double what the state received in the previous two years.

  1. Tax Credits
  2. Rebates
  3. Energy Assistance Programs

The Residential Clean Energy Credit (Section 25D)

The Inflation Reduction Act expands an existing tax credit allowing consumers to claim a credit for up to 30 percent of the costs of residential energy-efficient property, such as the installation of solar. The credit is retroactive to the beginning of 2022.

How much you can save?

  • The credit is for up to 30 percent of project costs and can be claimed in the year that the project is finished.

Qualifying Projects: Clean energy projects eligible for the credit include solar electric projects, solar water heating projects, fuel cell projects, small wind energy projects, geothermal heat pump projects, biomass fuel projects, and battery storage (beginning in 2023).

Visit the Solar Energy Technologies Office page on the Office of Energy Efficiency & Renewable Energy website.

The Energy Efficient Home Improvement Credit (Section 25C) 

The Inflation Reduction Act allows consumers to claim a credit for up to 30 percent of the cost of qualified energy efficiency improvements and expands the credit to cover home energy audits. The expanded credit is available beginning in 2023.

How much you can save?

  • The credit has a total annual cap of up to $1,200 per year, except for heat pumps (cap of up to $2,000).

Qualifying Improvements: The credit applies to heat pumps, energy-efficient windows, energy-efficient exterior doors, insulation, and upgrading breaker boxes to accommodate the additional electric load. Certain improvements must meet applicable Energy Star requirements. Roofing and air-circulating fans will no longer qualify for the credit. The upgrade costs for appliances include equipment, installation, and labor costs.

 The Clean Vehicle Credit (Section 30D and 25E)

Consumer tax credit for up to $7,500 for individuals to buy new clean vehicles (Sec. 30D) and up to $4,000 to buy used clean vehicles (Sec. 25E).

Because of the complexity, the exact amount a consumer will receive for a particular vehicle is not yet clear.

  • Treasury will issue rules clarifying how much credit consumers can receive for particular electric vehicles purchased.

 How much you can save: 

The credit is limited to individuals with annual income below:

  • New Cars: $300,000 for joint filers, $225,000 for head-of-household filers, $150,000 for single filers;
  • Used Cars: $150,000 for joint filers, $112,500 for heads of household, and $75,000 for single filers.

Qualifying Vehicles: 

  • New Vehicles: Individuals with a contract to purchase an electric vehicle signed prior to August 16, 2022, may claim a credit based on the rules that were in effect prior to the enactment of the Inflation Reduction Act.
  • Starting in 2023, the new vehicle credit is limited to sedans with a manufacturer’s suggested retail price (MSRP) of up to $55,000 and trucks and SUVs with an MSRP of $80,000 or less.
  • Used Vehicles: The credit can be used for clean non-commercial vehicles sold for $25,000 or less and older than two years, including electric vehicles and plug-in hybrids.

 EV owners typically save between $6,000 and $10,000 in operating and maintenance costs each year compared to gas vehicle owners.

View the list of vehicles that may be currently eligible through December 31, 2022. Visit the U.S. Department of the Treasury website for further details on the credit.