The Inflation Reduction Act: what you need to know

RESOURCES TO SAVE YOU MONEY AND ENERGY

At CERTs we share tools and resources to keep you informed on how to save energy and money with energy efficiency methods and renewable energy options. The Inflation Reduction Act of 2022 will make it easier than ever before to save money and energy, and we want to help you navigate the incentives.

As new clean energy incentives arrive, we will update this page including date-stamps within each section, as well as share the new information in our Energy Stories newsletter. Sign up to stay on top of the updates!

Questions? Feedback? Let us know!

Note: We're sharing resources to assist Minnesotans who are seeking information about federal funding opportunities. These resources are based on preliminary information released by the federal government. Program information may change as more guidance is provided by federal and state governments. For specific information on federal funding, please visit the relevant U.S. Government websites and consult with tax professionals regarding tax incentives that apply to you.

The Latest IRA Updates

What you need to know about the IRA: Tax credit vs Rebate

Inflation Reduction Act clean energy incentives webinar

What you need to know about the IRA: Area Median Income

What you need to know about the IRA: Direct Pay

Residents: What you need to know about...

Manufactured Homes + Energy Star

$2,500 available for ENERGY STAR certified manufactured homes meeting the most recent ENERGY STAR Manufactured New Homes program requirements (currently Version 2, with Version 2.1 currently proposed to be implemented in May 2023).

Visit CERTs Energy Guide for Manufactured Homes

Updated 1/9/2023

Residents + Electric Vehicles

February 2023 Update: The IRS increased some MSRP caps for the EV tax credit.

You may qualify for a credit up to $7,500 if you buy a new, qualified plug-in EV or fuel cell electric vehicle. Your modified adjusted gross income may not exceed:

$300,000 for married couples filing jointly
$225,000 for heads of households
$150,000 for all other filers

Visit CERTs Guide to EVs

Updated 3/21/2023

Residents + Energy Assessments

Households can capture a credit of up to $150 for a home energy audit.

Depending upon your local utility, Minnesotans can access a few different energy assessments. CenterPoint Energy and Xcel Energy customers can work with Home Energy Squad for an assessment. Income-eligible households can get these assessments for free.

In addition, if you are a Minnesota Energy Resources natural gas customer, you can request a whole home audit.

Learn more about Energy Audits and Benchmarking

Residents + Energy Efficiency Tax Credits

Beginning now, in 2023 through 2032: The overall total limit for an efficiency tax credit in one year is $3,200.

This breaks down to an annual limit of $1,200 for any combination of home envelope improvements (windows/doors/skylights, insulation, electrical) plus furnaces, boilers and central air conditioners.

Any combination of heat pumps, heat pump water heaters and biomass stoves/boilers are subject to an annual total limit of $2,000.

Note: ENERGY STAR certified geothermal heat pumps are eligible for a separate tax credit and not counted against these limits.

More tax credit details for homeowners at ENERGYSTAR.gov and within this IRS FAQ from Dec. 2022 [PDF].

Updated 1/9/2023

Residents + Energy Efficiency Rebates (late 2023)

Guidance on how home energy rebates will be implemented isn't expected until late 2023.

Homeowner and Occupant Monetary Encouragement and Stability (HOMES) rebate program that low- and moderate-income households will be able to access for rebates. These will be based on the estimated energy savings from energy updates, and will be doubled for households with low income.

High Efficiency Electric Home Rebate Program (HEEHRA) will provide point-of-sales rebates for qualified electrification projects for low- or moderate-income households. Up to $14,000 in rebates per household will be available. Rebates anticipated include:

Electric Load Service Center upgrades/Breaker box	$4,000
Electric Stove, Cooktop, Range, and/or Oven	$840
Electric Wiring	$2,500
Heat Pump Clothes Dryers	$840
Heat Pump Heating/Cooling	$8,000
Heat Pump Water Heaters	$1,750
Weatherization (Insulation, Air Sealing, Ventilation)	$1,600

A low- or moderate-income household is one where an individual or family which has a total annual income less than 150 percent of the median income of the area in which the individual or family resides.
Home electrification rebates may cover up to 100% of a total qualified electrification project’s cost for households with a total annual income less than 80 percent of the area median income.

Visit ENERGY STAR's rebate finder for current rebates.

Visit the U.S. Department of Housing and Urban Development's online tool to determine household income categories.

Updated 2/15/2023

Residents + Heat Pumps

Tax credit of up to 30% of the cost for purchase (between Jan. 1, 2023 and Dec. 31, 2032) and installation of a heat pump, up to $2000. Visit Air Source Heat Pump Tax Credit for eligible products and credit details.

In addition, there will be a new point-of-sale rebate for people earning up to 150% of area median income that will apply to heat pumps, heat pump water heaters, and heat pump clothes dryers. The rebate has a $14,000 cap.

Visit the ENERGY STAR Rebate Finder.

Learn more about Heat Pumps

Updated 1/9/2023

Residents + Solar

30% tax credit for any project advanced in 2022 and will apply to projects through 2032. Projects with battery storage connected to and powered by solar also qualify.

As of 2023: Standalone residential energy storage systems >3kW in capacity will also qualify for a 30% tax credit (they do not need to be connected to/powered by solar).

Visit the Homeowner's Guide to the Federal Tax Credit for Solar Photovoltaics via Energy.gov (Vea esta página web en Español.)

Visit CERTs guide to Solar Energy

Commercial: What you need to know about...

Commercial + Electric Vehicles

Find details at IRS Commercial Clean Vehicle Credit.

Visit CERTs Guide to EVs

Updated 1/9/2023

Commercial + Rural Energy for America Program (REAP)

New in 2023: 40% grants for rural businesses, farms and agricultural producers!

Businesses must be located in rural areas with populations of 50,000 residents or less. Agricultural producers may be in rural or non-rural areas, must have at least 50% of their gross income coming from agricultural operations.

Eligible projects include renewable energy (e.g., solar, wind, biomass) and energy efficiency upgrades (e.g., high efficiency HVAC, insulation, refrigeration, switching from diesel to electric irrigation motors).

Deadline for fiscal year 2023 application is March 31, 2023.
More details and applications at USDA.gov.

Updated 1/9/2023

Commercial + Solar

Currently: The current 26% Commercial Solar Investment Tax Credit is increased to 30% and extended through 2024; the 30% applies to solar projects placed in service during or after 2022.

Coming in 2023: The base credit applies to projects <1 MW or that meet prevailing wage and apprenticeship requirements. If a project is >1 MW and does not meet those requirements, the base credit is 6%.

There will also new credit adders that can be stacked for additional benefit:

Up to 10% for projects that are located in "energy communities" (defined as brownfield sites, communities with high fossil fuel employment and high unemployment, and/or communities with closed coal mines or coal-fired power plants).
Up to 10% for solar projects <5MW located in low-income communities; applications will be required.
Up to 20% for solar projects < 5MW and built as part of an affordable housing project or to benefit low-income households; applications will be required.
Up to 10% for using US-manufactured solar products and construction material.
Energy storage facilities are also eligible.

In 2025: this provision becomes the "Clean Electricity Investment Credit"; extended through 2032 or until emission targets are reached.

Visit Solar Energy Industries Association (SEIA) for a review of the Investment Tax Credit Extension (Section 1302), Production Tax Credit Addition (Section 1301), and Transition to New Technology Neutral Credit (Sections 13701 and 13702).

View Federal Solar Tax Credits for Businesses via Energy.gov

Note: This provision also allows a direct pay option for tax-exempt entities. More to come on this!

In addition to federal incentives, many businesses in Minnesota also have access to Property Assessed Clean Energy (PACE) financing for solar projects.

Learn more about PACE

Local Government: What you need to know about...

Guides for Cities & Counties

American Cities Climate Challenge Funding Guidance.
Climate Action and the Inflation Reduction Act: A Guide for Local Government Leaders: Climate Mayors and C40 released a guidebook to help cities navigate the Inflation Reduction Act.
Climate City Corner | The Inflation Reduction Act and Cities (podcast): Episode 43 of City Climate Corner shares incentives for cities with the new law through interviews with Dr. Pete Wyckoff, Sr. Policy Advisor for Climate Energy and the Environment, and Minnesota Senator Tina Smith.
Local Energy Rules | How Cities Can Make the Most of IRA Dollars (podcast): Episode 168 of Local Energy Rules shares ways cities can use Inflation Reduction Act funds for energy improvements, and includes a list of additional resources in the notes.
National Association of Counties | Legislative Analysis for Counties.
National League of Cities | Inflation Reduction Act: Clean Energy Project Eligibility for Local Governments.