Earlier this week, President Biden signed the Inflation Reduction Act into law. The federal government will be spending $370 billion over the next decade to fight climate change. It’s a sprawling initiative that covers incentivizing green energy production, industry efficiency, expansion of the Affordable Care Act, and a lot more. But let’s forget the broader implications for society for now: You might be able to use the IRA to get a free stove and a cheap electric car.
What rebates can you get from the Inflation Reduction Act?
Although it’s not clear exactly when the IRA-enabled rebates will hit stores—there are some serious details to work out—over the next few years, consumers, particular low- and moderate-income consumers, should enjoy point-of-sale rebates on a number of different appliances and home improvements. A heat pump-enabled water system could cost $1,750 less, and you might be able to save up to $840 on an electric/induction range to replace a gas range. Depending on your income and your cooktop-of-choice, that could mean a free major appliance.
The IRA also allocates funds for upgrading your home’s electrical system to handle the new electric appliances too, through tax credits of up to $4,000. Whether you’ll enjoy the same rebates if you replace an old electric stove with a new one remains to be seen—the federal funds are to be allocated by the states, so keep updating this site in the coming months to check your state’s clean energy initiatives, an pay attention to the moves of your state government.
The general idea is to make the upfront cost of more efficient home appliance lower for consumers, but that’s only the most obvious savings. The average household is projected to save between $175 and $220 a year on power due to cheaper energy and less costly goods and services. But if you replace your furnace with an electric heat pump, install a better water heater, install rooftop solar panels, and convert to an electric vehicle, you could save $1,800 per year on energy bills.
It’s impossible to give an exact amount of cash any individual might extract from the provisions of the IRA. Factors like income, location, whether you own you home, and more, play into the final amount, and the details haven’t been worked out, but you can use this calculator from Rewiring America to get a better idea of the specific savings you might expect.
Can you get a deal on an electric car?
Sadly, the government is not handing out electric cars like Oprah Winfrey, but they are extending an existing tax credit for the purchase of electric vehicles. The electric car tax credit is expected to be $7,500 for new cars, which takes some of the sticker shock of buying an electric car away. For the first time, purchasers of used vehicles will be eligible for a tax break as well, to the tune of up to $3,750.
Electric cars are already cost less to drive and maintain than gas-powered cars, but systemic changes to the energy grid are expected to make it even less expensive to charge your ride. There are plans to add half a million charging stations to the grid, as well.
It’s not all roses on the electric car front, though. Auto manufacturers say that the sourcing requirements of the IRA may mean that some U.S. cars won’t be eligible for some rebates and credits, and many cars that are eligible for rebates now won’t be in 2023. Like most of the details, which cars will be eligible for which kinds of tax incentives and rebates isn’t finalized. The IRS has until the end of the year to provide the tax details.
How corporations will try to siphon the money earmarked from consumers into their own coffers remains to be seen, as well, but if I were a betting man, I’d put some money on it.