High-schoolers headed to college are alleged to leave as much as $100 million in unused scholarship dollars on the table each year.

The money is there, but you have to apply for it to get it… and apparently not enough kids know that, or they just don't take action.

So too do homeowners neglect to take advantage of free money for making specific home upgrades.

There has (probably) never been a better time to get dollar-for-dollar tax credits on a wide range of various items, thanks to federal and more local-level incentives.

In this blog post, I’m going to share as much as I can find in the next couple hours of research.

Hopefully it contains something that will help you or inspire you to dig a little deeper before you budget full-pop for a new piece of equipment, an electric vehicle, or an energy-related home upgrade.

A decade of tax credits begins now!

Last August President Biden signed the “Inflation Reduction Act” which has been called the “most aggressive action that we have taken to confront the climate crisis.”

The legislation devotes about $370 billion to things like health insurance subsidies, tax code reform, caps on pharmaceutical spending......and lowering energy consumption and costs for consumers and small businesses.

If you’ve been planning to add any of the following, it’s probably worth a few extra minutes of reading and applying to see if you and/or the item qualify for a tax credit:

• Heat pumps

• Heat pump water heaters

• Furnaces

• Boilers

• Biomass heat sources (wood and pellet stoves)

• Exterior doors, windows, and skylights

• Insulation

• Weatherization (caulk, sprayfoam, housewrap)

• Home energy audits

• Electrical panel upgrades

• Solar, wind, geothermal

• Electric vehicles

Tax credits for these items are available until the year 2032, and provide a range of tax credit amounts.

In the case of solar panels, which I'll go deeper into below, you stand to take a tax credit worth 30% of the equipment and installation cost WITH NO CAP on the amount!

On many of the smaller upgrades, you can spread them year over year and max out your allowable credits each year.

Here’s the page on EnergyStar.gov that goes over the bullet-pointed list above, with links to these and every other qualifying category affected by the Inflation Reduction Act.

Catch some rays!!!

Have you been thinking about adding solar panels to your rooftop?Again, there is a 30% of total-project-cost tax credit available for that, as well as for wind, geothermal heat pumps, and battery storage, also through the year 2032.

A solar upgrade always starts with a simple “site assessment” to see if your property is a good candidate.

The site assessment is free of charge and you’ll be given a very accurate report of the system and installation costs, what it will do to your electric bills, and when your “break-even date” will hit.

Email my friend Scott Weber of Lumio, who installed over $11 million in systems last year, and he'll get you scheduled for an assessment.

Did you buy an EV in '22?

Did you buy an all-electric, plug-in hybrid, or fuel cell vehicle before January 1, 2023?There are potentially significant tax credits available if certain criteria are met:

Up to $7500 for new, and $4000 for used vehicle purchases prior to the new year.

For “clean” vehicles purchased AFTER January 1, 2023, there is new language (new since the original Inflation Reduction Act was signed in August, 2022) that now has more criteria including income limits, vehicle price limits, battery performance, etc.

Check it out here.

How to maximize your tax credits

The following wise advice is a direct copy-and-paste from the EnergyStar.gov web page:

Given the way the annual aggregate limits are structured, it may be prudent to spread your improvements over a few years.

If your heating or cooling system is old, and you are considering a new air source heat pump, it is always wise to optimize your attic insulation first, so you don’t pay for more heating and cooling than you actually need.

Making these upgrades together in one year would allow you a tax credit of up to $1,200 for the insulation and up to $2,000 for the heat pump.

Similarly, you could combine a heat pump installation with window/door replacements.

In that scenario, the $2,000 credit for the heat pump could be combined with tax credits up to $600 total for the windows/skylights plus $500 for two or more doors.

If you replace your water heater the following year, you would be eligible for another 30% tax credit, up to $2,000 plus up to $600 if you need an electric panel upgrade to accommodate the new water heater.

Who & what is & isn't eligible?

Note that these tax credits are (interestingly) limited to owner-occupied primary residences and second homes.

That is, they are NOT eligible for rental properties (which, as we've discussed in the past, make up the majority of housing units in Bellingham.)Again, here is the link to read about the incentives and qualifying items related to homeowners.

For reasons I’m unsure of, the EnergyStar.gov web page does not include any information on kitchen and laundry appliances – despite those being allegedly included in the Inflation Reduction Act.

Some of the information I found cited that electric stove and clothes dryer incentives DO exist, but are currently restricted to low-income households.

I found this page on Energy.gov to be a very easy-to-read table of qualifying upgrades / items.

It also includes a link to IRS tax form 5695 which is what you'll file with your taxes to take advantage of the tax credits.

If you have something helpful to add that is related to the Inflation Reduction Act, just reply to this blog post and I'll update readers in the next issue.

PSE & CNG rebates, too!

The Inflation Reduction Act isn’t the only incentive program that exists to encourage energy efficiency.Puget Sound Energy has its own set of rebates and incentives.

Whether your home currently runs primarily on gas or electricity, you can find information on PSE’s rebates here.For example, you can get 50 cents per square foot on an attic insulation upgrade.

Or $75 towards a smart thermostat.Are you a customer of Cascade Natural Gas?

There’s rebate money available from them too, such as for that same smart thermostat if you heat primarily with natural gas.Here’s the page to all their residential rebates currently available.

It's the perfect time!

With tax filing season right around the corner, why not lean in and spend a little time browsing some of these new tax credit details?

The information you learn might also be the kick you need to make some of those upgrades you’ve been dreaming about these past couple of years.

Be sure to let me know if you take action, and how it works out!