🌎⚡️: A free electrified bank account, you say?
What's in IRA -- from INI & Rewiring America
I come today bearing news about your bank account — your SUPER FLUSH ELECTRIC bank account, that is!
Anywho: It's almost 2023, and you know what that means!
It's time for our new BEST FRIEND IRA to become fully operational!
You're excited. I'm excited. IRA (who I will continue to anthropomorphize, you're welcome) is definitely excited.
But you might also be a little bit like -- "Hey, so, I wrote down all the appliances I need to get to electrify, but maybe you could talk me through the broad strokes of the various discounts, tax credits, financing, etc."
Great question, thanks for asking.
Because, honestly, what even are those things? Is money even real? (FTX doesn't seem to think so) Are colors real? Is the universe real? Maybe?
Before we get into details, today's most important take-away is this:
You have our permission to think of IRA as a free electric bank account with your name on it — and all of your friends suddenly have one, too!
It's like a slush fund that Joe Manchin reluctantly gifted to every American household, except instead of blowing it all on a one-way ticket to Puerto Vallarta -- which, to be clear, you should totally do at some point in your life -- you get to use it to lower your bills, make your home drastically more comfortable, and maybe stop the oceans from boiling. Win win win.
Last note on timing in what's turned out to be a lengthy "introduction", good work, Quinn:
Some of the incentives are available now. The tax credits will drop Jan 1, but many of the upfront discounts will only become available once your state rolls them out — maybe middle of the year? I don't know. I don't make the rules (but I do try to elect candidates who do!).
Bottom line: IRA's going to provide the average American household -- including and especially low-income households -- an electric bank account stuffed with $10,600.
That's obscene. Let's break it down.
Appliances, Electric Upgrades, Efficiency Improvements
IRA offers households (doesn't calling yourself a "household" sound so formal and grown-up? My lord. What happened to us?) up to $14,000 in up-front discounts to switch over to electric appliances and upgrade their homes.
IRA will cover up to 100% of project costs for low-income households (under 80% of Area Median Income) and up to 50% of costs for moderate-income households (between 80 and 150% of Area Median Income).
What's included? Electric stoves, heat pumps, heat pump water heaters and driers, upgrades to your electric panel/fuse box, electric wiring, weatherization, and energy efficiency retrofits. You can read more about those here.
IRA offers you up to $7500 in tax credits towards the purchase of a new electric vehicle and up to $4000 in tax credits towards the purchase of a used one, which is really an untold win, all things considered.
Further: if you're from a low-income or rural community you can get up to $1000 back for an EV charger.
In 2024, these incentives magically turn into up-front discounts.
Rooftop Solar and Home Storage
IRA provides 30% of the cost of rooftop solar, home batteries, and geothermal systems. I want a geothermal system. Who wouldn't want to tell their kids the wifi's powered by HOT MAGMA? Would it be? I'm unclear on that, but I'd tell them anyways.
Anyways the rebates and tax credits here can cover installation costs, too!
Don't skip over the fact that households will probably save on average $1800 a year by going electric. Gas prices up and down because of some insecure dictator? Who cares!
But Also, Too
You're probably thinking "This is all great but is it like a Target sale where I wasn't intending on spending any money at all, but since there's a sale, I rationalize it, because it's less than full price, conveniently ignoring I wasn't intending to spend anything at all?"
Great news: In a lot of cases, you might not have to spend a dime.
Your IRA incentives depend on your income, which could include up to 50-100% of appliance and installation costs discounted at purchase (for way more specific details, check out Rewiring America's awesome calculator).
Highest-income households aren't eligible for upfront discounts, I'm sorry/you're welcome — you'll have to pay full price for appliances and installation. But tax credits on the back end could recoup 30%-ish of costs!
What If I'm A Renter?
IRA's upfront electrification discounts and electrification tax credits can all be used by renters! Huzzah!
And of course renters are eligible for the used and new EV tax credits.
PLUS: Lots of the electrification upgrades (window-unit heat pumps, induction cooktops/stoves, heat pump clothes dryers) are relatively portable, so you can, you know, carry them (?) — no, wait, that's ridiculous, you'll probably want to bribe a friend to help you load them in an YOUR NEW/USED ELECTRIC VEHICLE to drive to your new home.
In addition to everything above, you'll want to check throughout 2023 for any additional state and local government incentives and maybe even utility incentives to see 1) if they exist and 2) if you're allowed to stack them on top of IRA's free dough.
As we discussed in great fun in my Get Electric! prep guide, you want to get prepping' now to be ready when the money hits.