The IRA tax credits will help homeowners transition to all-electric appliances.

• For heating and cooling:
  • Air-source heat pumps (30% credit, up to $2,000 – annual limit of $1,200 may be exceeded). Learn more about what a heat pump is, qualifying heat pumps, and read the Focus on Energy Heat Pump Buying Guide.
  • Geothermal heat pumps (30% credit with no upper limit because this is considered renewable technology)
• For water heating:
  • Heat pump water heaters (30% credit, up to $2,000 – annual limit may be exceeded)
  • Solar hot water heaters (30% credit, no limit because this is considered a renewable technology)
• Electric panel or circuit upgrades for new electric equipment (30% credit, up to $600)
• Efficient air conditioners and heating equipment (30%, up to $600)

Eligibility

Labor expenses are eligible expenses for heat pumps, heat pump water heaters, electric panel upgrades, and more.

Homeowners (primary or secondary houses) and tenants are eligible for to receive these credits.

Read more about the equipment specifications required to be eligible for tax credits.

Tax credits of up to 30% of eligible expenses for residential solar installation are available, with no dollar cap or income qualifiers.

For reference:

A typical residential rooftop installation in Wisconsin is 7 kW and might cost about $24,000 (costs will vary based on size, complexity of installation and other factors). The tax credit for a $24,000 installation is $7,200, which would reduce the installation cost to $16,800.

Learn more about installing solar energy on your residence.

What Costs Qualify?

These credits are available to all costs associated with solar installation as well as any battery storage. However, note that "the cost of roof installation is generally not eligible, except for incremental costs, or the amount over what you would have spent if the root was not used for solar. These costs could include solar shingle, solar tiles, or the incremental cost of installing a reflective roof membrane that increases electricity generation."

Eligibility

Existing homes and new construction qualify. Both principal residences and second homes qualify. Rentals do not qualify. The home served by this system does not have to be the taxpayer's principal residence.

A principal residence is the home where you live most of the time. The home must be in the United States. It can include a house, houseboat, mobile home, cooperative apartment, condominium, and a manufactured home.

Additional Credits and Rebates

Wisconsin households may qualify for additional incentives for a solar installation. Many households, for example, qualify for the Focus on Energy rebates. (Focus on Energy eligibility for solar incentives is based on whether or not your electric utility participates in Focus.)

Entities might also get discounts or incentives from manufacturers or installers. 

The IRS guidance for residential clean energy credits states "you may need to subtract subsidies, rebates or other financial incentives from your qualified property expenses because they're considered a purchase-price adjustment."  See that guidance for more details. 

In addition to solar energy, the 30% tax credit applies to:

• Wind generation
• Geothermal systems
• Solar water heaters
• Fuel cells
• Battery storage

Because these are all renewable energy projects there is no maximum tax credit, and this credit can roll over to future years.

Purchasing New Electric Vehicles

The U.S. Treasury recently provided updated guidance on purchasing new and used electric vehicles.

• Total tax credit available is up to $7,500
• Credit is only available for qualified vehicles. List of eligible vehicles. Check and note vehicle eligibility upon vehicle purchase as this list will be continually updated and eligibility is dependent upon purchase date.
• Retail prices (MSRP) cannot exceed
  • Pickups, SUVS, and vans must cost < $80,000
  • Cars must cost < $55,000
    • Some car models have exceptions to this limit and have an $80,000 MSRP cap.
• Household income requirements for the tax credits
  • Joint tax return < $300,000
  • Head of household < $225,000
  • Single-payer < $150,000

2023 guidance on EV credit for purchased vehicles

Instant Rebates

Beginning in 2024, point of sale rebates are now available at select dealerships, meaning that the purchaser can receive the equivalent tax credit off the purchase price rather than waiting to file their annual tax return.

Instant rebates are both simpler for the purchaser while also conveying two major advantages. First, the purchaser does not need to have a tax liability at least equivalent to the tax credit amount of $7,500, but also the instant rebate is deducted from the sale price, which lowers the sales tax of the purchase as well.

Purchasing Used Electric Vehicles

• $4,000 tax credit or 30% of vehicle’s sale price
• Stipulations:
  • Vehicle’s model must be at least two years older than the current “new” model year,
  • Total vehicle cost must be less than $25,000
  • Buyer must purchase vehicle from a dealer
  • Credit available only once per vehicle (so the purchaser or the dealer need to verify that previous owner didn't claim this credit)
• Income requirements:
  • Joint tax return < $150,000
  • Head of household < $112,300
  • Single-payer < $75,000

Instant Rebates

Used electric vehicles are now eligible for instant rebates, meaning the tax credits are available as a point of sale reduction in purchase price at select dealerships.

Instant rebates are both simpler for the purchaser while also conveying two major advantages. First, the purchaser does not need to have a tax liability at least equivalent to the tax credit amount, but also the instant rebate is deducted from the sale price, which lowers the sales tax of the purchase as well.

Leasing New Electric Vehicles

When you lease a vehicle the company leasing you the vehicle can access a different, commercial vehicle EV tax credit. Typically companies pass the tax credit savings onto you as the person paying for the lease. The IRS guidance indicates that leased EVs do not fall under the same Buy American requirements as purchased EVs. That means that some vehicles that are not eligible for a tax credit if you purchase the vehicle will be eligible for a tax credit at lease. In IRS terms, it’s the difference between a Section 30D credit and a Section 45W credit.

Electric Vehicle Chargers

Some individuals can receive a 30% tax credit, up to $1,000, for the installation of a home electric vehicle charger.

To qualify, the equipment must be placed in a low-income community or a non-urban area. Low-income communities include population census tracts where the poverty rate is at least 20% or is a metropolitan or non-metropolitan area census tract where the median family income is less than 80% of the state medium family income level.

Some electric utilties also offer incentives for the installation of EV charging infrastructure. Search for electric utility incentives at Drive Electric Wisconsin.