Simplifying IRA rebates: an affordable path to energy efficiency and control

The Inflation Reduction Act (IRA), enacted in 2022, is a game-changer for homeowners. It offers historic incentives to combat climate change and make homes more energy efficient. Among its many provisions, the IRA introduces major rebates for homeowners to upgrade their electrical systems, enhance energy efficiency and adopt clean energy solutions. Let’s dive into the two key programs: the Home Electrification and Appliance Rebate (HEAR) and the Home Efficiency Rebate (HER) program. 

Home Electrification and Appliance Rebates (HEAR) 

The HEAR program, formerly the High-Efficiency Electric Home Rebate Act (HEEHRA), provides upfront discounts for qualified electrification upgrades such as heat pumps, induction stoves and smart electrical panels. These rebates support low- and moderate-income households transitioning to energy-efficient, electric technologies. The HEAR program offers: 

• Low-income households (under 80% of area median income): Up to 100% of electrification project costs, including labor, capped at $14,000. 

• Moderate-income households (80-150% of area median income): Up to 50% of electrification project costs, capped at $14,000. 

Different electrification upgrades have maximum rebate caps depending on the type of upgrade. Rewiring America has a helpful page that explains the program in detail.  

Image: A chart of the maximum HEAR rebates available (Rewiring America).  

The program also incentivizes contractors to perform electrification projects in LMI (low- and moderate-income) communities by offering contractors rebates of up to $500 per project. 

Home Efficiency Rebates (HER) 

The HER program, formerly known as HOMES, focuses on energy savings and efficiency. It offers rebates for retrofit projects like weatherization, space heating and cooling, and water heating that cut energy use by 20% or more: 

• 20% or more energy savings: Up to $2,000 in rebates. 
• 35% or more energy savings: Up to $4,000 in rebates. 

These rebates double for low- and moderate-income households. The HER program is ideal for undertaking comprehensive energy efficiency retrofits. Rewiring America has a helpful page detailing this program as well. 

Understanding income categories 

In the context of the IRA rebate programs, “low-income" and “moderate-income" households are defined based on their income relative to the Area Median Income (AMI): 

• Low income: Households earning less than 80% of the area median income (AMI). This means if the median income in your area is $60,000, a household earning less than $48,000 would be considered low-income. 

• Moderate income: Households earning between 80% and 150% of the area median income (AMI). Using the same example, a household earning between $48,000 and $90,000 would be considered moderate-income. 

For specific thresholds in your area, you can often find AMI information on your local housing authority or state energy department websites. Also, Rewiring America’s electrification savings calculator considers income level and can quickly determine what incentives a homeowner may qualify for. 

Program rollout timing 

The rollout of these rebate programs is state-specific, with each state tailoring the incentives to its unique needs, and the timing and specifics can vary quite a bit. Here is the latest status as of June 2024: 

• Approved and available: New York is the first state to launch their IRA rebate programs. 
• Funding approved: California, Hawaii, Washington and Maine are in the process of launching their programs.
• Applications in process: 19 states have applied for full funding, while 48 states and territories have applied for early administrative or full program funding. 

Most states expect to launch rebate programs by 2025, focusing on low- and moderate-income homeowners. However, eligibility, covered projects and rebate structures will vary by state. To keep track of program rollout state-by-state, go to the Department of Energy’s (DOE) Home Energy Rebates page.  

Combining incentives and credits for electrical panel upgrades 

Homeowners looking to upgrade their electrical panels as part of an electrification, clean energy or energy efficiency project can benefit significantly from these incentives. Lumin’s smart panel isn’t just any upgrade—it can retrofit to any existing setup, making the installation smoother and less disruptive than a full panel replacement. Plus, its load management features can help optimize clean energy investments and maximize homeowner energy savings. 

Depending on income level and the project's specifics, homeowners could receive substantial rebates for electrical work. For example, low-income households can get up to $4,000 back for a panel upgrade under the HEAR program. Even moderate-income households can see significant savings, up to $2,000. Alternatively, if an electrical panel upgrade is combined with an energy efficiency retrofit project, such as weatherizing or upgrading to energy-efficient appliances, the HER rebates can provide nearly double those amounts. 

Additionally, homeowners can combine IRA rebates with existing federal tax credits: 

• Energy Efficient Home Improvement Credit (25C): A 30% tax credit for electrical panel upgrades, up to $600, when combined with other qualifying improvements. 
• Residential Clean Energy Credit (25D): A 30% uncapped tax credit for electrical panel upgrades alongside clean energy installations, like rooftop solar or battery storage. 

While homeowners can’t combine these two tax credits or the two IRA rebates for the same service, they can pair one of the tax credits with one of the IRA rebates for increased savings. 

In short, there are some fantastic opportunities to help homeowners embrace sustainability and save money. Check your state’s rollout plans, look into these credits and rebates, and consider how an upgrade like the Lumin Smart Panel can be a force multiplier for home improvement projects.  

Helpful resources 

To maximize available incentives for home upgrades, Rewiring America provides some of the most helpful resources: 

• For a helpful breakdown of the IRA rebate programs, visit their HEAR and HER pages.
• To learn more about the relevant tax credits, visit their (25C) and (25D) pages.
• Use their electrification savings calculator to estimate potential savings and determine which IRA rebates and federal tax credits you might qualify for.
• For state-specific incentives, visit your state’s energy department website or search the Database of State Incentives for Renewables & Efficiency (DSIRE) for relevant programs.