The Inflation Reduction Act allocates rebates and tax credits to residents and households based on income.
For new electric vehicle purchases, there is an income limit in order to qualify for the tax credits ($300,000 adjusted gross income on a join tax return, and $150,000 for single tax returns).
Rebates for efficient appliances use area median income to determine the amount of rebate a household is eligible for.
- If a household's income is over 150% of the area median, they aren't eligible for rebates.
- However if a household's income is below 80% of the area median they may receive a rebate for the full cost of their upgrade, up to $14,000.
So how do you figure out your area median income?
The area median income is the midpoint of a designated region’s income distribution — half of households in the region earn more than the median and half earn less than the median.
The Department of Housing and Urban Development (HUD) publishes income limit information annually, which will be used to determine area median income for each county (as stated in Inflation Reduction Act Home Energy Rebates Program Requirements & Application Instructions [PDF])
To estimate your area median income, add all household wage-earners gross income, then add up the number of people living in the household (adults and children). Now lookup your location in the HUD income limits chart, locate your household size, and then see which category is closest to your household income. Note the HUD chart doesn't calculate 150% area median income.