(Photo by Melanie Conner/Getty Images)
Going green has never made more sense. Thanks to new federal incentives, you can save a bundle in 2023.
Whether you’re buying an electric vehicle or making green energy improvements to your home, there are lots of tax breaks for lowering your carbon footprint. There are a number of tax plums in the Inflation Reduction Act:
- Rooftop Solar. This is the one home improvement that can pay dividends — and lower your electric bill for decades. The IRS will give you a tax credit equal to 30% of the cost of installing rooftop solar. According to Rewiring America, the average 6 kilowatt solar installation costs about $19,000making the average solar tax credit about $5,700. Homeowners can also reap a 30% credit if they need to upgrade their electricity panel for rooftop solar plus a 30% credit for installing battery storage.
- Heat Pumps. Despite their confusing name, heat pumps are one of the most energy-efficient ways to heat — and cool — a home. There’s no combustion involved, so the carbon footprint is practically nil. The IRS offers you a generous deduction: You can a tax break for 30% of the cost, up to $2,000. The units can be three to five times more efficient than traditional gas or electrical resistance heaters, so you can save a lot.
- Electric Vehicles. Whether you’re buying a compact sedan, SUV or fancy pick-up truck, nearly every automaker offers an EV. The breaks are a little trickier, though. They only apply to certain models at certain times and are income-adjusted. The credits are up to $7,500 depending on the vehicle and phase out above $150,000 for single filers and $300,000 for joint filers. Keep in mind that the credit has many catches according to The Washington Post: “The vehicles will also have to be assembled in North America, and cars that cost more than $55,000 aren’t eligible, nor are vans or trucks that cost more than $80,000. Beginning about March, however, that $7,500 credit will be split into two parts: Consumers can get a $3,750 credit if the vehicle has a battery containing at least 40 percent critical minerals from the United States (or a country that the United States has a free-trade agreement with) and another $3,750 credit if at least 50% of the battery’s components were assembled and manufactured in North America.” All told, it’s not quite clear yet how these new rules will apply, though.
The general idea here is that good ecology is good economics. The more energy you produce yourself and less fossil fuels you consume, the more you save. Going green has never been a better idea.
