Inflation Reduction Act Energy Cost Savings

Last year, I was proud to join House Democrats in supporting President Biden's Inflation Reduction Act, helping pass into law the largest investment in climate action in American history. Thanks to this newly enacted legislation, Missouri families are eligible for hundreds of dollars in energy savings. The historic legislation will:

  • Create millions of good-paying American jobs
  • Put the U.S. on track to reduce emissions by up to 40 percent over the next decade

Visit the Department of Energy Savings Portal(link is external) to learn more about potential savings.

To ensure folks get the most out of these savings, Missouri households can take advantage of various tax credits and rebates to help make their homes more efficient, power their homes with clean energy, and lower the cost of purchasing electric and hybrid cars.

 

TAX CREDITS FOR RESIDENTAL ENERGY EFFICIENCY IMPROVEMENTS

Qualifying Energy Improvements

 

Beginning in 2023, homeowners can receive up to 30 percent back through tax credits for making energy efficiency improvements to their homes – these credits are generally up to a maximum of $1,200 per year, but potentially up to $3,200 if improvements include heat pumps, heat pump water heaters, or biomass stoves.

The Inflation Reduction Act makes household savings available to hard-working Americans, including:

  • Up to 30% (generally capped at $1,200 per year) in tax credits for energy-efficient home improvements, including heat pumps
  • Rebates for residential efficiency retrofits, electrification projects including heat pumps, cooktops, and other appliances – as well as associated electrical upgrades
  • Up to 30% in tax credits for rooftop solar, batteries, geothermal heat pumps, and other property
  • Up to $7,500 in tax credits for new electric vehicles, and up to $4,000 for used electric vehicles, depending on taxpayer income and other factors

For more specifics on what improvements qualify as eligible, see the table at the bottom of this page.

TAX CREDITS FOR RESIDENTIAL ENERGY PROPERTY

Tax Credits For Residential Clean Energy Systems

 

Missourians are able to receive a tax credit of 30 percent of the cost of property for rooftop solar and other residential clean energy systems installed on their homes. Eligible property includes:

  • Residential solar and solar water heaters
  • Small wind
  • Geothermal heat pumps
  • Battery storage
  • Fuel cells

Eligible expenditures include certain onsite installation costs. Solar expenditures include products like solar shingles.

Individuals that do not have sufficient tax liability to use up the entire credit amount during the year they install the property may carry forward any remaining credit for future tax years.

Moreover, individuals could potentially see reduced pricing from community solar or solar leasing options, where the commercial entity takes the business credit for the property, rather than the individual.

MORE WAYS TO SAVE:

The Clean Vehicle Credit: consumer tax credit for up to $7,500 for individuals to buy a new electric vehicle or plug-in hybrid, up to $4,000 to buy used versions of either.

Who qualifies?: Credit is limited to individuals with annual income below:

  • New cars: $300,000 for joint filers, $225,000 for head-of-household filers, $150,000 for single filers
  • Used cars: $150,000 for joint filers, $112,500 for head-of-household filers, $75,000 for single filers

Which vehicles qualify?:

  • New vehicles: Individuals with a contract to purchase an electric vehicle signed prior to August 16, 2022 may claim a credit based on the rules that were in effect prior to the enactment of the Inflation Reduction Act
  • Beginning in 2023, the new vehicle credit is limited to sedans with a manufacturer’s suggested retail price (MSRP) of up to $55,000 and trucks and SUVS with an MSRP of $80,000 or less
  • Used vehicles: The credit can be used for electric non-commercial vehicles sold for $25,000 or less and older than two years, including electric vehicles and plug-in hybrids

Click here(link is external) for frequently asked questions on clean vehicle tax credits.

STAY IN THE KNOW:

American consumers can save more than $1,000 per year by taking advantage of these energy efficiency incentives.

Click here(link is external) for frequently asked questions on consumer energy efficiency and clean energy tax credits. For a more complete look at energy savings, thanks to the Inflation Reduction Act, visit the White House portal here(link is external).

Click here(link is external) for area median income lookup tool to see what your income limit is.

Click here(link is external) to calculate how much your household could save.

Click here(link is external) to sign up for updates and to find out which programs are available to you.

Click here(link is external) to access Evergy, and here(link is external) for the Missouri Department of Natural Resources – Energy Division.

MORE DETAILS ON ELIGIBLE ENERGY EFFICIENCY IMPROVEMENTS

More Details on Energy Efficiency Improvements