PEARLAND Blog

Inflation Reduction Act Increases Insulation Savings for Homeowners

It’s time to take home improvement to the next level! In an effort to encourage eco-friendly products and services, new programs are rolling out to help provide support for clean energy production. The new Inflation Reduction Act is helping property owners earn money back for making environmentally friendly improvements to their homes starting in 2023. Here's the basic breakdown and how Koala Insulation of Pearland can help you with various benefits. 

A Brief Summary: 3 Major Updates

There are three significant areas that cater to home improvement projects like upgraded insulation and air sealing. While some are adjustments to programs that are already in place, others are newer to provide even more options to property owners. 

The Energy Efficient Home Improvement Credit is essentially an updated version of the Nonbusiness Energy Property Credit that ended in 2021. If you’re familiar with the credit system, this will have a similar role but with new and improved initiatives. This system grants you the opportunity to reduce your tax bill when you purchase energy-efficient upgrades and appliances for your home. 

Another way the bill encourages homeowners to reduce their regular energy usage is through the HOMES (Home Owner Managing Energy Savings) Rebate Program. In order to reduce energy usage in more households, these rebates are offered through cashback opportunities. After scheduling a DOE-approved energy audit, the projected savings you’ll make from certain home improvements will determine how much money you’ll get back.

One of the last major home improvement changes is actually within the HOMES Rebate Program. The High-Efficiency Electric Home Rebate Program offers rebates to encourage households to make environmentally friendly choices on qualified purchases. However, this section specifically caters to low- and middle-income families who qualify.

How Much Can You Save With The Inflation Reduction Act?

Increase your return on investment opportunities for energy efficiency upgrades with the new Inflation Reduction Act. Upgrading areas like insulation and air sealing can help to improve temperature regulation, indoor air quality, and energy conservation. What makes these improvements even better is the fact that they can earn you some money back in several ways.

The Energy Efficient Home Improvement Credit

The Energy Efficient Home Improvement Credit will likely be a common benefit homeowners will be able to take advantage of. Energy-saving installations such as insulation, windows, or doors can have 30% of the cost claimed to start in 2023. As we mentioned earlier, this credit system is an upgrade from the Nonbusiness Energy Property Credit. While the original system had a lifetime limit of $500, the Inflation Reduction Act has updated the limit to $1,200 annually. While various annual limits will be adjusted for qualifying improvements, your team of local experts can help you navigate the various benefits you'll be able to receive. 

The HOMES Rebate Program

Work on reducing your energy waste while also earning money back on various types of upgrades. To earn these rebates, you’ll need to schedule an energy audit that returns DOE-approved results. The amount you receive will be determined based on the amount of energy saved, the projected savings, and the income of your household. You can earn from 3 rebate amounts, earning the lesser of either 50% of the project cost or: 

• Measured Energy Savings <15%: up to $2,000 for a 20% reduction of energy use
• Modeled Energy Savings 20%-35% : $2,000 
• Modeled Energy Savings >35% : $4,000

The High-Efficiency Electric Home Rebate Program

Finally, the High-Efficiency Electric Home Rebate Program helps households that are low- and middle-income earn money back for making environmentally friendly changes. To qualify, the annual income of the household needs to be less than 150% of the area’s median income. Certain purchases that qualify in the HOMES program will have adjusted benefits for these households. 

Insulation, air sealing, and ventilation, specifically, can earn up to $1,600 in rebates. While there can be limits or additional qualifications for certain purchases, you can find out more about the requirements with your local home improvement experts. In addition to these programs, the bill also provides rebates and funding to local programs and initiatives. Many of these will be funneled through state programs, which means you could increase your individual energy efficiency rebate programs even more. Most of these funds will remain available through 2031 or longer in certain cases, so you can plan out evaluations and upgrades within the next few years.

How Insulation Can Save You Money Outside Of Credits and Tax Returns

In order to maintain a safe and comfortable environment, your insulation and air sealing need to be regularly evaluated and updated. These are the materials that provide a significant contribution to the thermal regulation and climate control capabilities of your home. Insulation reduces the rate of heat transfer, which is how easily heat enters and exits a structure; meanwhile, air sealing air leaks, which helps keep in desired warmth and conditioned air throughout the year. 

Did you know that insulation can be found in places other than your attic? The material needs to be updated within the walls, between ceiling joists, and even under the floors! Having poorly maintained material in these areas can contribute to drafts, cold spots, and irregular temperatures in your space. Not only does this increase discomfort but it also has an impact on your savings!

On top of the new Inflation Reduction Act and your area's energy efficiency rebate programs, updated insulation and air sealing provide a quality return on investment throughout the year. With a temperature-regulated home, you waste less energy by reducing unwanted heat loss and gain during uncomfortable temperatures. With less heat transfer and fewer air leaks, your regular heating and cooling bills are reduced thanks to better climate control. Your HVAC system no longer needs to run constantly to match the desired temperature on the thermostat, which also reduces regular maintenance fees. 

Can Energy Efficiency Save You More This Year?

Our insulation experts provide free evaluations that detail the current condition of your home’s insulation and air sealing. In order to make cost-effective decisions that also maximize energy efficiency, it’s important to have a team that can help you balance price with environmentally friendly products. By using the best industry practices, we can help you save even more on your regular bills while also finding the maximum return from The Inflation Reduction Act. Save more throughout the year with the Inflation Reduction Act changes by contacting your local industry experts at Koala Insulation of Pearland today to schedule your free evaluation.