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Updates to the Inflation Reduction Act: What You Need to Know

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3 Ways the Inflation Reduction Act Can Help You Join the Electrification Movement

 

President Joe Biden signed the Inflation Reduction Act (IRA) in August 2022. This monumental legislation aims to build a better economy while helping to battle inflation. This act is often viewed as a condensed version of the Build Back Better Bill stalled in congress.

 

While most of the IRA is focused on cutting healthcare costs and creating a new corporate minimum income tax (on companies with at least $1 billion in income), several provisions are meant to encourage the use of renewable energy in hopes of battling climate change.

 

Since many of the Inflation Reduction Act provisions didn’t start the moment the bill was signed, there have been several updates to the policy. These updates are meant to make the initiative to “go green” more accessible for people nationwide, thus strengthening the United State’s energy security position.

 

Read on to learn more about the Inflation Reduction Act and what changes have been made now that the bill is in effect.

 

The Inflation Reduction Act is one of the most monumental bills passed in ages

What Is In the Inflation Reduction Act?

The original version of the IRA was signed on August 16th, 2022, and it immediately drew attention with several strong provisions. While this plan will not reduce inflation right away, it has the potential to make a long-lasting impact that will help American families for years to come.

 

Here are some of the highlights of the IRA:

  • Create a 15% corporate minimum tax rate for companies with at least $1 billion in income

  • Allowing Medicare to negotiate some prescription drug prices

  • IRS tax investment to help the organization deliver on its duties

  • Subsidy extensions for the Affordable Care Act (ACA) to help Americans maintain their health insurance plans

  • Investments in energy security and climate change to encourage electrification and reduce carbon emissions

 

Homeowners, real estate investors, and climate activists are most excited about the various tax rebates and incentives that help people enjoy the benefits of electrification without breaking the bank. Property owners can save on everything from purchasing electric vehicles to upgrading their electrical panels.

 

The original version of the Inflation Reduction Act could help home, and business owners save tens of thousands of dollars. The recent updates to the bill allow it to stretch even more for those who pursue electrical upgrades.

 
  1. Rebates for New Electrical Appliances

Homeowners or landlords in the market for new appliances can save some serious money by switching to electric appliances. Even if your current appliances are not ready to be replaced, it may still be an excellent time to upgrade to more efficient and effective ones.

 

Under the IRA, property owners can save quite a bit on qualified appliance upgrades:

  • Electric heat pump water heater: up to $1,750

  • Electric heat pump for space heating and cooling: up to $8,000

  • Electric heat pump clothes dryer: up to $840

  • Electric stove, cooktop, range, or oven: up to $840

  • Electric load service center: up to $4,000

  • Electric wiring: up to $2,500

  • Insulation, air sealing, and ventilation upgrades: up to $1,600

 

It is essential to realize that upgrading electrical appliances may not be as easy as merely purchasing a new appliance and plugging it in. Depending on the age of your home and your electric service panel, you may need to contact your local Gilroy electrician to inspect your home’s electrical grid. Sometimes, you may just need to run a new electrical line to power your updated electric appliance. In other cases, you may need to replace an old, inefficient electrical panel to handle the modern needs of electrical appliances.

 

Before you significantly upgrade your home, speak with a Santa Clara County electrician to ensure you can get the most out of your purchases.

 

Electric water heaters offer hot water at a fraction of the cost of gas heaters

  1. Tax Credits for Electric Vehicle Charging Stations

Businesses and homeowners can benefit from purchasing electric vehicles and at-home EV charging stations. The Inflation Reduction Act brings back Clean Vehicle Credits, up to $7,500 for qualifying new EVs and $4,000 for qualifying used Evs. These credits occur at the point of sale, so you will see the discount apply immediately.

 

Along with credits for the purchase of electric vehicles, property owners can also earn a sizable credit for installing EV chargers. This credit was good for up to 30% of the costs for equipment. The most significant change is that businesses previously could only qualify for up to $30,000 in credits, and for companies in qualifying areas, that limit has been pushed to $100,000.

The increase in EV purchases has lead to more home EV charging stations

  1. New Grants to Encourage Electrification

The High-Efficiency Electric Homes and Rebates Act (HEEHRA) allocates up to $4.5 billion for various electrification rebates to the states. HEEHRA programs vary by state and are still being designed.

 

We know that qualifying households can qualify for up to $14,000 in HEEHRA funds for upgrading their water heaters, appliances, wiring, etc. HEEHRA is different from the original IRA because it is reserved for households making less than 150% of the area median income as defined by the Department of Urban Housing and Development.

 

Households making less than 80% of the area median income can use rebates to pay for 100% of the costs to make qualifying upgrades. Families making between 80 and 150% of the area median income can use rebates to pay for up to 50% of the associated costs.

 

Count on Watson’s for Your Electrical Upgrades

If you are ready to take advantage of the Inflation Reduction Act to upgrade your home and join the electrification movement, contact Watson’s Charging Stations & Electric. As the leading group of licensed electricians in the Gilroy, CA, and Santa Clara Valley area, we love helping homeowners and businesses improve their properties that will save them money and reduce their carbon footprints. With the various rebates and incentives available through the IRA, you can enjoy letting Uncle Sam help pay for your following home improvement projects. Give us a call to schedule a free consultation and learn more about how the IRA can help you join the electrification movement.