We’re keeping a close eye on the Inflation Reduction Act (IRA) as the distribution of funds and actual rebates coming from State governments is yet to be determined.
Just last Thursday, (July 27, 2023) the U.S. Department of Energy (DOE) announced it is accepting applications for state and territory implementation of the two Home Energy Rebate programs created by the Inflation Reduction Act. These programs will provide $8.5 billion to states and territories to lower energy costs and increase efficiency in homes by making home energy upgrades more affordable.
As of right now – the only part of the IRA that’s solid – is the federal 30% tax credit, meaning anything you do that qualifies will definitely give you a tax credit, assuming you have the tax liability to base that credit against. What’s still unknown is how instant rebates are going to work for the various median income levels.
For example –let’s say today I have a plan to replace an older window, insulate my attic and probably replace my old water heater. I’ll be able to utilize the federal IRS 30% tax credit for up to $1,200 in labor and equipment when I file my taxes next year, but what I don’t know is how much I could get for instant rebates (up front discounts) through the State of Minnesota if my adjusted gross income (as seen on my federal 1040 tax form) is under 150% or under 80% of the Area Median Income (AMI) level.
If I’m considered low income to moderate income, I may be able to get it all for free or at a reduced cost at the time of purchase, depending on what the State offers.
That’s what the Minnesota Department of Commerce (energy) is going to develop next. So if income is a consideration, one might want to wait to see what the State offers for instant rebates, but if your water heater goes out today – you can purchase a water heater, get a federal 30% tax credit for costs up to $600 and, if you purchase it from Crow Wing Power on the off-peak program, you can count on a $300 to $400 rebate from us as well, regardless of your income.
(For residents of Crow Wing County the AMI is $89,700 for 2023 for a family of 4. Anyone with household incomes less than 150% of the AMI or less than $134,550 (depending on family size) would be eligible for some additional Minnesota instant rebates.)
*see your tax advisor for exact interpretation of the laws