Home Upgrades

Summary

Homeowners can receive tax credits through the IRA to improve energy efficiency and install renewable energy. In general these opportunities apply to a taxpayer's primary residence. In some cases second homes are eligible but these are not available for rental properties occupied by tenants. 

Additional grant programs for energy efficiency and electrification for both homeowners and landlords will be forthcoming, likely in early 2024 (see details below). 

Because the IRA includes a mix of tax credits and other incentives, the benefits will vary based on the homeowner's specific situation. Rewiring America has a calculator that lets a user input their specific data and see estimated benefits. To see specific scenarios for how the IRA can benefit Americans go to the White House's IRA info guide and scroll to "See how these tax credits can work for families like yours" at the bottom of the page. Also see IRS FAQs about energy efficient home improvements and residential clean property credits.

Tax Credits

The Department of Energy has a summary of the available tax credits.  Also see the IRS FAQ on the tax credits. What's a Tax Credit?

Grant programs

In addition to the tax credits some households will qualify for grants to make their homes more efficient and to electrify their homes. These grant programs are still being finalized and more information is expected in late 2023 with programs launching in 2024.

Home Efficiency

Energy efficiency tax credits are available on an annual basis, which means you can make new improvements each year. Learn more about all of the efficiency tax credits and download the summary table to the right for reference. In addition, this fact sheet from Rewiring America summarizes qualified electrification upgrades. 

Home Energy Audits

Home energy audits are a great place to begin making home efficiency improvements. After a home inspection, the audit will reveal the areas for the greatest energy efficiency improvements, and therefore the areas for the greatest potential energy savings. Then you can make a plan for how to prioritize making those upgrades over a number of years.

Up to $150 in tax credits are available for home energy audits. Learn more about home energy audits from Focus on Energy.

Electrification 

Under the Inflation Reduction Act there are tax credits available for transitioning to efficient all-electric air-source and ground-source (geothermal) heat pumps that will heat and cool your home. 

• Air-source heat pumps (30% credit, up to $2,000 – annual limit may be exceeded). Learn more about what a heat pump is, qualifying heat pumps, and read stories from those who have already made the switch.
• Heat pump water heaters, and biomass stoves (30% credit, up to $2,000 – annual limit may be exceeded)
• Electric panel or circuit upgrades for new electric equipment (30% credit, up to $600)
• Geothermal heat pumps and solar (water heating) (30% credit, no maximum)

Learn more about electrifying your home. 

Insulation and Efficiency

Several options for home efficiency tax credits exist within the Inflation Reduction Act:

• Insulation materials (up to $1,200)
• Windows, including skylights (up to $600)
• Exterior doors (up to $250 each/$500 total for all exterior doors)
• Efficient air conditioners, efficient heating equipment, and efficient water heating equipment (up to $600)
  • Learn more about qualifying heat pump water heaters

Payment Assistance and Grants

In addition to tax credits some households will qualify for grants to make their homes more efficient and/or to electrify their homes. There are both new IRA-funded grant programs and existing programs with increased funding from the 2022 Bipartisan Infrastructure Law.

• Households with an annual income below 60% of the state median income can qualify for programs that provide bill-payment assistance and energy efficiency improvements. Learn more.
• IRA grant programs are still being finalized and more information is expected in late 2023 with programs launching in 2024.

HOMES (Home Owner Managing Energy Savings) Rebate Program

The HOMES program grants individual states funding to provide homeowners and landlords (including multifamily buildings) rebates for energy efficiency improvements. Wisconsin will receive $74,904,830 for this program. The state of Wisconsin will determine the final program design and, following federal approval of that design, launch the program.

Once launched, rebates will be available for energy efficiency retrofits ranging from $2,000-$4,000 for individual households and up to $400,000 for multifamily buildings. Up to $2,000 will be available for retrofits that reduce energy use by 20% or more, and up to $4,000 for retrofits saving 35% or more. Available rebate allowances will double for low and moderate-income homes. 

More details for this program will be available in late 2023, when the State of Wisconsin creates its plan. We expect the program to launch in 2024.

High-Efficiency Electric Home Rebate Program

The High-Efficiency Electric Home Rebate Program grants individual states funding to provide homeowners and landlords (including multifamily buildings) rebates for home electrification, including electric panel upgrades, heat pumps, induction stoves, etc. Wisconsin will receive $74,470,200 for this program. The state of Wisconsin will determine the final program design and, following federal approval of that design, launch the program.

Once launched, rebates will be able to cover up to 100% of cost for households at or below 80% of area median income (which was $89,400 for a family of four in Dane County in 2022) and 50% for households between 80-150% of area median income. Households above 150% of area median income are not eligible for this program. 

More details for this program will be available when it is launched, likely in 2024. Rewiring America has a factsheet about the program in more detail here and the Department of Energy has a list of program FAQs.

Renewable Energy

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

A typical residential rooftop installation in Wisconsin is about 7 kW and costs 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 solar energy installations.

 

Home Efficiency Tax Credit Summary Table

Equipment Type	Tax Credit Available for 2022 Tax Year	Updated Tax Credit Available for 2023-2032 Tax Years
Home Clean Electricity Products
Solar (electricity)	30% of Cost
Fuel Cells
Wind Turbine
Battery Storage	N/A	30% of Cost
Heating, Cooling and Water Heating
Heat pumps	$300	30% of cost, up to $2,000 per year
Heat pump water heaters
Biomass Stoves
Geothermal heat pumps	30% of cost
Solar (water heating)
Efficient air conditioners*	$300	30% of cost, up to $600
Efficient heating equipment*
Efficient ater heating equipment*	$150	30% of cost, up to $600
Other Energy Efficiency Upgrades
Electric panel or circuit upgrades for new electric equipment*	N/A	30% of cost, up to $600
Insulation materials*	10% of cost	30% of cost
Windows, including skylights*	10% of cost	30% of cost, up to $600
Exterior doors*	10% of cost	30% of cost, up to $500 for doors (up to $250 each)
Home Energy Audits*	N/A	30% of cost, up to $150
Home Electric Vehicle Charger	30% of cost, up to $1,000	30% of cost, up to $1,000**

*Subject to cap of $1,200/year

** The IRS will soon publish further information on eligibility requirements related to home electric vehicle chargers, but we know that credits are intended for residents in non-urban or low-income communities.

Source: U.S. Department of Energy

Tax Credit Requirements and More Information

Some products include labor costs as eligible expenses. Additionally, some of the tax credits are available for homeowners for their first and second homes as well as tenants.

Read more here about the details for eligible labor expenses, eligibility for secondary residences, as well as more specific information about requirements each product must meet to be eligible for the credit.

 

Vehicle Upgrades

Purchasing New electric vehicles

In October 2023, the U.S. Treasury provided updated guidance on purchasing new and used electric vehicles. Beginning January 1, 2024 buyers will be eligible for a point of sale tax credit on the vehicle.

• Total tax credit available is up to $7,500
• List of eligible vehicles. Check and note vehicle eligiblilty upon vehicle purchase as this list will be continually updated and eligibility is dependent upon purchase date.
• To be eligible for the tax credits
  • Vehicle must have a battery capacity of at least 7 kilowatt hours
  • Have a gross vehicle weight of less than 14,000 pounds
  • Be made by a qualified manufacturuer. See index of qualified manufacturers and vehicles
  • Undergo final assembly in North America. To verify, check list of Electric Vehicles with Final Assembly in North America or check final assembly location listed on the vehicle's VIN sticker.
  • 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 and 2022 guidance for vehicles purchased before 2022.

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
  • Must purchase vehicle from a dealer
  • Credit available only once per vehicle (so need to verify that previous owner didn't claim this credit)
• Again, there are also income requirements:
  • Joint tax return < $150,000
  • Head of household < $112,300
  • Single-payer < $75,000

2023 White House guidance on EV credit for purchased vehicles.

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 those savings onto you as the person paying for the lease. The preliminary 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

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-meetropolitan area census tract where the median family income is less than 80% of the state medium family income level.