3 Ways To Go Green Starting This Month
In 2023, you can electrify your home — and your car — with the help of the U.S. government.
In late 2022, Congress passed the Inflation Reduction Act, the biggest climate bill in history. Starting in the new year, the bill will offer households thousands of dollars to transition over from fossil-fuel burning heaters, stoves and cars to cleaner versions. On Jan. 1, middle-income households will be able to access over a half-dozen tax credits for electric stoves, cars, rooftop solar and more. And starting sometime in mid-2023, lower-income households will be able to get upfront discounts on some of those same appliances — without having to wait to file their taxes to get the cash back. Check out this online tool to see what you might be eligible for, depending on your Zip code and income.
But which credits should you go after and which are best for the climate?
Heat pumps:
Tax credit available on Jan. 1: 30 percent of the cost, up to $2,000
Income limit: None
Heat pumps are more like super-efficient combo air conditioning and heating systems, which run on electricity and move heat, instead of creating it. This can be three to five times more efficient than traditional gas or electrical resistance heaters. Heat pumps can have enormous cost and carbon savings. According to one analysis using data from the National Renewable Energy Laboratory, switching to a heat pump can save homeowners anywhere from $100 to $1,200 per year on heating bills and prevent anywhere from 1 to 8 metric tons of carbon dioxide emissions per year.
Electric vehicles:
Tax credit available on Jan. 1: Up to $7,500 depending on the make and model of the car
Income limit: <$150,000 for single filers; <$300,000 for joint filers
Transit is the best way to decarbonize your transport, but for many, due to various reasons, transit doesn’t work for them. Switching to an electric vehicle (EV) is the next best solution, but EVs can be prohibitively expensive for many Americans. Starting Jan. 1, a new EV tax credit will offer consumers up to $7,500 off the purchase of an electric vehicle. For the first few months, Americans will get somewhere between $3,751 and $7,500 off their purchase of an EV, depending on the size of the battery in the car.
There are limitations, per the new law. The vehicles will also have to be assembled in North America, and cars that cost more than $55,000 aren’t eligible, nor are vans or trucks that cost more than $80,000. This week, the Internal Revenue Service provided a list of vehicles that are expected to meet the criteria starting Jan. 1.
Beginning about March, however, that $7,500 credit will be split into two parts: Consumers can get a $3,750 credit if the vehicle has a battery containing at least 40 percent critical minerals from the United States (or a country that the United States has a free-trade agreement with) and another $3,750 credit if at least 50 percent of the battery’s components were assembled and manufactured in North America. Those rules haven’t been finalized yet, so the tax credit starting on Jan. 1 is a stopgap measure until the White House has ironed out the final version.
Rooftop solar:
Tax credit available now: 30 percent of the cost of installation, no cap
Income limit: None
For those who want to generate their own clean energy, there is always rooftop solar panels. This tax credit has actually been available since the Inflation Reduction Act was signed into law in August 2022. It offers a tax credit equal to 30 percent of the cost of installing rooftop solar, with no cap. According to Rewiring America, the average 6 kilowatt solar installation costs about $19,000, making the average solar tax credit about $5,700. (The Inflation Reduction Act also includes a 30 percent tax credit for homeowners that need to upgrade their electricity panel for rooftop solar, and a 30 percent tax credit for installing battery storage.)
Solar panels can save homeowners tens of thousands of dollars in utility bills and, when combined with battery storage, can also provide a power backup in the case of a blackout or other disaster. For someone trying to move their entire home away from fossil fuels, solar panels become even more enticing: Switch everything over to electricity, and then make the electricity super cheap with the help from the sun.
How you start decarbonizing your life isn’t as important as just starting. It’s like dieting or any other change in your life. You have to take the first step, and then another step.
