The Inflation Reduction Act for Wisconsin Homeowners

Since the IRA’s passing in 2022, homeowners like you (and us!) have been excited about all the opportunities it provides for weatherizing your homes. This can include replacing windows, upgrading attic insulation, and moving to more efficient heating and cooling systems. Some benefits took effect immediately, while others are still rolling out.

If you want to take advantage of all the IRA has to offer, this post is for you. We’ll cover the ways you can prepare for additional opportunities as they arise.

What You Need to Know About the IRA in 2024

First, the IRA has three major incentives for homeowners: tax credits for upgrades, rebates based on energy assessments (HOMES), and rebates for electrification upgrades (HEERA).

It is important to highlight, these incentives (both rebates and tax credits) will be around for several years, so you have time to utilize them to their fullest! That being said, it does appear the rebates will be first-come, first served, and will eventually run out—likely before the IRA’s other offerings expire. So plan ahead and don’t delay getting started!

As with any such program, the IRA benefits for homeowners are a complex program. We have experts on staff to provide the detail you need to make the right decisions for you and your home. But here are the highlights …

Inflation Reduction Act Tax Credits – AVAILABLE NOW

Tax credits are a dollar-for-dollar reduction on what you owe in federal taxes. You will claim and receive this when you file your taxes later.

$1,200 per year max (30% of material cost) for a combination of insulation, air sealing, windows, doors, furnaces, boilers, water heaters and air conditioners. (Note, certain rules apply on each.)
Up to $150 tax credit on an energy assessment.
$2,000 per year max on air-source heat pumps or heat pump water heaters
30% of the cost of geothermal heating, solar panels, and a few other renewable upgrades. (No maximum.

Inflation Reduction Act Rebates – ESTIMATED MID-2024

Like other rebates, these represent a reduction on the sticker price of the project. It could either be immediately deducted from an invoice or mailed to you a short time afterwards.

$2,000 off (or 50% of total, whichever is less) off any collection of improvements found by an energy assessment would reduce energy use by 20% (or $4,000 off if moderate income)
$4,000 off (or 50% of total, whichever is less) off any collection of improvements found by an energy assessment that would reduce energy use by 20% (or $8,000 off if moderate income)
Up to $14,000 off a collection of electrification projects such as installing heat pumps (aka an air conditioner that can both cool and heat a home), heat pump water heaters, heat pump dryers, electric service upgrades and more. (HEERA)

And please note, these are just the federal rebates. There are often Wisconsin Focus on Energy state rebates for other upgrades!

Energy Assessments Unlock IRA Benefits for Homeowners

Because the Inflation Reduction Act incentives will be around for several more years—and some can benefit you yearly—here’s what we recommend:

First things first: Get an energy assessment of your home! Here are two great reasons why:

You will qualify for an up to $150 federal tax credit just from having an assessment performed on your home.
It will also help you determine the best way to access the $2,000-$8,000 in rebates from the HOMES program so you can be early in line once they’re fully available!
Once the programs are fully announced, Energy Assessor’s schedules will fill up fast. Get your self in line now

Consider taking advantage of Focus on Energy rebates for things like attic insulation/air sealing. Currently Focus provides between $1,200 - $1,800 in rebates for air-sealing & insulating an attic. At this time it isn’t 100% clear if these can stack with HOMES rebates for the same project. So to qualify for both, you may want to break the projects up.

IRA and Attic Insulation Rebates

Insulating your attic may help you achieve the 20% reduction that would unlock $2,000+ in federal rebates. Even if it doesn’t reach the 20% benchmark, it still brings you that much closer to achieving it through additional improvements.

So, for example, you could qualify for $1,200 in Focus on Energy rebates for attic insulation and air sealing now, then utilize the HOMES rebates’ $2,000+ off for additional energy saving improvements like sealing ductwork, insulating basement walls or replacing single pane windows.

Tax Credits for Windows

Consider upgrading a few windows to triple-pane ENERGY STAR models. There is a $600 annual federal tax credit for low u-factor windows, but it tends to cap out after a few windows. By upgrading a few each year, you could qualify for the $600 tax credit again and again!

Between insulating, windows and/or energy assessments, you’ll likely qualify for $1,200 in tax credits in your first year!

HOMES and HEERA Rebates

The expected mid-2024 arrival of these rebate programs is getting close! Now is the time to implement what was recommended by your energy assessment. This could allow you to utilize the $2,000 - $8,000 rebates for improvements that are found to reduce energy use by 20% or more.

IRA Funding for Energy Efficiency

Consider an air-source heat pump or heat pump water heater too, with thousands off the cost of installing them and up to $2,000 in tax credits specifically for heat pumps. This is on top of the $1,200 you’d also have available for other upgrades made in insulation, air sealing, HVAC, windows and more. Your energy assessor can help you find out what to expect with heat pumps in your home.

Planning your IRA Benefits for 2025 and Beyond

Once you have looked at where you can upgrade the building’s envelope (what keeps you separate from outside), and you are starting your path down electrifying devices like heat pumps, induction ovens, etc. (to step away from using gas), it’s time to plan what comes next. Consider looking at solar panels to start to source your electricity from renewable sources. You’ll qualify for 30% federal tax credit for solar, window and geothermal systems you install.

Why wait until later, you may ask. Why not install solar right away? Well, while you could install solar panels first, we recommend a different order to make the most of your eventual solar energy:

Seal and insulate the home.
Install electric heat pump heating when it is easier to heat/cool the better insulated/sealed home.
Get solar panels able to handle the new electric need you have from heat pumps, induction ovens, electric vehicles, and more.

Otherwise, your solar panels may not cover all of your electric bill.

From here we encourage you to continue upgrading your home piecemeal to take advantage of the $1,200 per year federal tax credit. Consider continuing to upgrade windows to triple pane, consider replacing to energy efficient exterior doors, consider continuing to further air seal the home, etc.

All together you should maximize the new federal incentives to qualify for thousands in rebates and thousands more in federal tax credits over multiple years! All to make your home more comfortable, reduce carbon emissions to protect the planet, and to reduce your utility bills!

So, what should you do first? Get an energy assessment to find out where to start in your home.

-- Kevin Kane, Chief Economist, Green Homeowners United