Here’s how to take advantage of tax credits, rebates on major appliance sales next year

Credit: Kevork Djansezian

Credit: Kevork Djansezian

If your furnace is aging or your gas stove could use replacing, there could be reason to consider upgrading your home’s appliances as we head into the new year. A package of tax credits and rebates could help are people recoup the costs of switching to electrical appliances, and otherwise making their homes more energy efficient.

These initiatives, which are part of the Inflation Reduction Act passed by Congress and signed by President Joe Biden last summer, could help cut thousands of dollars off the price tag of major home improvement projects over the coming years.

Already, Miami Valley companies that deal with home appliances are sensing eagerness from customers looking to take advantage of the potential savings.

“Next year is really going to be humungous,” said Sean Wells, comfort advisor with the A-Abel family of companies, which — among other things – deals with heating and air conditioning. He expects strong demand for home improvement projects in the years to come

“I think there is going to be a tremendous increase in what we’re going to see,” Wells said.

Rebates

The program that perhaps the largest number of Ohioans will eventually be able to tap into is known as the “High-Efficiency Electric Home Rebate Act.”

Under this initiative, the Inflation Reduction Act calls on states to provide rebates to low- and middle-income households that purchase electrical appliances — instead of, say, natural gas ones. These rebates could help offset the cost of big-ticket purchases like heat pumps, water heaters, electric stoves, dryers, insulation and other home air-sealing measures.

Households below 80% of the area’s median income level would be able to see 100% of their costs offset, up to a maximum $14,000 (with specific caps for specific types of appliances).

Households falling between 80% and 150% of the area’s median income would be able to see 50% of costs rebated.

“That’s a lot,” Wells pointed out. “There’s a lot of benefits to switching to heat pumps now.”

A second program — the HOME Rebates program — would allow households to receive as much as $2,000 or $4,000 in rebates for major projects that decrease a home’s energy usage by at least 20% or 35% respectively.

Moderate- and low-income households could receive up to double those amounts.

While Ohio leaders would ultimately be responsible for doling out the funds and defining income brackets, for context, the average median income in Montgomery County for 2017-2021 was $56,543, according to the U.S. Census Bureau.

Ohio is set to get more than $249 million from the U.S. Department of Energy to implement these rebate programs, according to federal records reviewed by the Dayton Daily News.

Federal records show the money is expected to be available at some point in 2023, though Ohio Department of Development officials tell the Dayton Daily News they are still awaiting further guidance from the Biden administration before rolling out the program.

Tax credits

Home owners considering upgrades could also benefit from a couple of different tax credits expanded and extended under the Inflation Reduction Act.

One such credit — the Energy Efficiency Home Improvement Credit — will allow home owners to offset 30% of the cost of energy efficient upgrades — it was previously 10% – for energy efficient upgrades like adding insulation, or doors and windows that better seal off a home from the outdoor elements — thus requiring less energy use.

Under the Residential Clean Energy Credit, home owners can now offset 30% of the cost of adding some even bigger-ticket clean energy improvements, including rooftop solar, wind, geothermal and battery storage for large batteries.

Both tax credits apply to purchases made in 2022, and both run in their current state through 2032.

These are both federal programs, so you’ll claim these tax credits when filing your federal taxes.

Credit: Kevork Djansezian

Credit: Kevork Djansezian

A push for electric

Amid these incentives for electric appliances, A-Abel is already noting a surge in calls from homeowners.

“I’ve seen more interest in heat pumps and hybrid systems; it’s definitely on the increase,” Wells said. “A lot of home owners are calling in, wanting to switch from natural gas to electric, and we’re doing quite a bit of conversions right now.”

The Public Utilities Commission of Ohio (PUCO) estimates about three million customers of PUCO-regulated natural gas utilities, and 4.5 million customers of PUCO-regulated electric utilities, the agency told the Dayton Daily News.

Wells urged that customers choose licensed professionals to conduct these home improvement projects, noting the biggest mistake a customer can make: “Going with the cheapest guy.”

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