Monadnock Perspectives: Inflation Reduction Act provides benefits for residents


Monadnock Ledger-Transcript

Published: 03-28-2023 1:00 PM

The Inflation Reduction Act (IRA) was signed into law by President Joe Biden in August of 2022. It’s the largest climate bill ever passed in the U.S., and is meant to advance decarbonization and promote economic growth in the country with a focus on energy.

So, what does it mean for New Hampshire?

According to Nora Hanke, program manager for the Monadnock Sustainability Hub, “The IRA has been described as ‘a bank account for home and personal transport electrification.’”

Since the beginning of 2023, New Hampshire residents have been able to earn tax credits for certain weatherization and energy-efficiency purchases through the IRA. This is in an effort to encourage people to make their homes more energy-efficient and to promote economic growth through weatherization- and energy efficiency-related jobs. 

Tax credits include up to $300 on home energy audits, $1,200 on weatherization measures, $2,000 on heat pump heating systems, $2,000 on heat pump water heaters and 30 percent of the cost of home solar installations or batteries. There is also a clean vehicle tax credit dependent on the vehicle.

However, Hanke explained tax credits may be limited by a taxpayers total tax bill.

“For example, if purchase of a new electric vehicle (EV) provides a potential credit of $7,500 but the buyer owes less than that in federal taxes for the year in which the purchase was made, then their credit is reduced,” she said.

Hanke said incentives last through 2034, but start to decrease in 2032, so people can spread out energy upgrades over a number of years, which can be beneficial for maximizing tax credits.

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A rebate program will likely roll out in 2024 as well, but “the mechanism of the rebates needs to be worked out,” said Hanke, which will be communicated from the federal government to the state. She explained that area medium income (AMI) will impact who qualifies for what rebates, so “low-income earners get bigger rebates.” 

Hanke said IRA incentives will enable energy upgrades such as replacing old appliances with energy-efficient ones and transitioning to heat pumps to heat homes rather than burning fossil fuels.

“The worse the building, the more to be gained,” she said. 

Hanke suggests homeowners start working to make their homes more efficient by detecting air leaks and moisture problems. She said these “are the low-hanging fruit for building energy efficiency” and sealing the house up will be the first step in determining the size of a solar array needed to power the home or the right heat pump to install. Then she suggests thinking about getting an energy audit.

The goal is to get closer to reaching the nation’s goals of reducing carbon emissions by 50 to 52% by 2030. 

“The IRA will make solar projects affordable for more households, increasing energy self-reliance and keeping more energy expenditure local,” said Hanke, “Without the  IRA, we as a nation are not on track to meet emissions goals.” 

The Monadnock Sustainability Hub is  a resource for IRA information, and is holding an IRA workshop on April 20 at 5:30 p.m. at the Monadnock Food Co-op in Keene.