Inflation Reduction Act: What It Means For Oregon Homeowners

With the passage of the Inflation Reduction Act (IRA) by Congress there is some good news for homeowners looking to make sustainable home improvement choices and reduce climate change.  With IRA incentives, homeowners can make smart home investments that will lower their utility bills while also helping the environment. In this blog we will take a look at the IRA and what it means for Oregon homeowners.

What Is The Inflation Reduction Act? 

The Inflation Reduction Act is a law that was passed by Congress in August of 2022 with the aim of promoting sustainable choices and reducing climate change. With the passage of the IRA, the federal government made an unprecedented $369 billion investment in fighting climate change and a decent amount of that money goes to help homeowners become energy efficient.

What Does The Inflation Reduction Act Do For Homeowners? 

The IRA incentivizes homeowners with energy rebates and tax credits to encourage energy-efficient upgrades to their homes, such as installing high-efficiency HVAC systems or weatherization improvements.

Consider Beginning With A Home Energy Audit 

To determine what energy efficiency upgrades you can do to your home, a home energy audit is a great place to start. A home energy audit assesses your home’s energy use which helps to identify areas where efficiency and energy savings can be improved. There is a partial tax credit available for an energy audit for your main home that qualifies for 30% of the cost up to $150.

Energy Rebates For Oregon Homeowners 

In addition to the IRA incentives, Oregon homeowners may be eligible for regional energy rebates and tax credits when they make energy-efficient upgrades to their homes. These incentives are state-specific rebates and can help reduce the cost of qualifying improvements, such as installing a high-efficiency HVAC system, weatherizing the home, or replacing old appliances and light fixtures. There are options for both owner-occupied and rental property:

• Single Family Home
• Manufactured Home
• Townhouse, Duplex, Triplex, Fourplex

There are also programs for income-qualified homeowners to receive increased cash incentives for energy-saving home improvements.

Energy-Efficient HVAC Systems

Incentives are based on the type of utility services (such as PGE or NW Natural) you have at your home and what type of HVAC system you install. Additionally, any upgrades should be installed by a licensed contractor. Energy Trust of Oregon incentives can range from $250 to $4,000 and change periodically so check in often. Incentives depend on the installation of qualifying products.

Insulation & Weatherization Improvements

Insulation is an important factor in energy conservation because it helps keep the temperature of a home consistent, reducing the amount of energy needed for heating and cooling. The Energy Trust offers varying quarterly and yearly insulation and weatherization incentives based on the type and utility services. The incentive for upgrading your home insulation range from $0.50 to $1.50 a square foot and from $1 to $1.50 a square foot for Energy Star-certified windows, though this is subject to change.

Energy Star Rebates

The Energy Star label is given to products that meet specific energy-efficiency standards set by the U.S. Environmental Protection Agency. By choosing Energy Star-certified products you may qualify for a rebate as well as saving money on energy bills.

Tax Credit Programs Under The Inflation Reduction Act

The Inflation Reduction Act helps homeowners save money in lots of ways. It gives a variety of tax credits for making energy-efficient upgrades to their homes. Below we review some of the other tax credits available.

Residential Clean Energy Property Tax Credit

The Residential Clean Energy Property credit is an updated reboot of an older federal tax credit and will now be available to taxpayers until 2032. That means homeowners considering solar installations or geothermal heat pump systems have plenty of time to consider their options. The Residential Clean Energy Property Credit is eligible for up to 30% of the cost:

• Solar panels
• Solar water heaters
• Storage batteries
• Contractor labor for onsite preparation, assembly, or original installation.
• Permitting fees, inspection costs, and developer fees.
• All equipment needed to get the solar system running, including wiring, inverters, and mounting equipment.
• Sales taxes on eligible expenses

Energy Efficient Home Improvement Credit

You can claim the Energy Efficient Home Improvement Credit (EEHIC) for making certain energy-efficient home improvements such as:

• exterior doors (30% of costs up to $250 per door, up to a total of $500)
• exterior windows and skylights (30% of costs up to $600)
• insulation materials or systems and air sealing materials or systems (30% of costs)

Homeowners can also get up to 30% of the cost of a home energy audit up to $150. If you are looking to upgrade your central air conditioner, gas furnace or water heater the EEHIC covers 30% of costs, including labor, up to $600 for each qualifying system. The maximum tax credit for building envelope components, home energy audits, and energy property is $1,200 per year in total. Electric or natural gas heat pump water heaters, electric or natural gas heat pumps, and biomass stoves and biomass boilers have a separate aggregate yearly credit limit of $2,000. Thus, the maximum total yearly energy-efficient home improvement credit amount may be up to $3,200. 

Labor Costs Vary By Credit

When calculating the Energy Efficient Home Improvement Credit, a taxpayer can add labor costs for installing residential energy-efficient items such as central air conditioners, water heaters, furnaces, boilers, heat pumps, or improvements to electrical systems.

With the Residential Clean Energy Property Credit, only the labor costs for onsite preparation, assembly, and original installation of the solar panels, as well as for piping or wiring to connect the qualifying material to the home, can be included.

Other Incentives For Home Improvements

Oregon homeowners may be eligible for additional incentives or loans to help them make energy-efficient upgrades to their homes.

Low-Interest Loans For Energy-Efficient Upgrades

If energy efficiency options are right for you, you can apply for energy-efficient financing through a government-insured or conventional loan program such as Fannie Mae’s Home Style Energy Mortgage.

If you are interested in financing energy improvements, HVAC financing from Jacobs Heating & Air Conditioning can help. We offer a variety of flexible financing options and can walk you through the process of paying for your new system.

Utility Company Incentives

There are a variety of other incentives offered by local utility companies that can save you money and help your home become more energy efficient.

PGE

The Peak Time Rebates program by PGE provides rewards for adjusting energy usage during times of highest energy demand and prices, often lasting 3 to 4 hours. There’s no fee to join and you can choose how to take part in each event. By reducing energy usage during these peak times, you can make a positive impact and shift energy use away from high-demand periods.

Energy Trust of Oregon

The Energy Trust of Oregon has a variety of ongoing programs for homeowners to save money. With their Smart Thermostat Program, you can save up to $80 on a new smart thermostat.

Also offered by the Energy Trust is their Savings Within Reach program to help make home energy upgrades more affordable for low-income households. If you qualify, you could receive cash incentives to create a more comfortable and energy-efficient home such as:

• $500 on ductless heat pumps
• $700 on ducted heat pumps
• $250 for heat pump controls
• $1000 instant discount on a gas furnace for 90% AFUE or greater
• $100 on a central AC with a minimum system SEER2 of 14.25 or greater
• $250 on a central AC with a minimum SEER2 of 15.20 or greater
• Up to $1.50 per square foot on windows based on the efficiency rating
• $1.25 sq ft for attic, ceiling, floor, and walls insulation

Energy Trust also offers on-bill financing to help reduce upfront project costs so you can make those energy-efficiency and renewable energy home upgrades.

NW Natural 

NW Natural Gas offers rebates that are updated typically every 6 months, and available for first-time and existing customers. New homeowners who switch their home heating system from electric or oil to a high-efficiency natural gas furnace after natural gas is installed in their homes can qualify for a rebate. Existing customers can receive money back by upgrading to a high-efficiency natural gas furnace through a NW Natural Preferred Contractor such as Jacobs.

Additionally, if you bring natural gas to your home for the first time and get a qualifying Generac natural gas generator, you may get a $500 incentive and a free Generac warranty worth $1,035.

NW Natural is also offering $500 back when you bring natural gas to your home for the first time and a NW Natural Preferred Contractor like Jacobs installs a qualifying natural gas tank or tankless water heater.

Simplifying The Process For Homeowners 

Here are some of the steps homeowners should take to access tax credits and local incentives:

• Research available programs & rebates in your area
• Understand eligibility requirements 
• Calculate potential savings & benefits
• Talk with a tax professional

Work With Professionals & Contractors 

Working with professional contractors is an important part of ensuring energy-efficient home upgrades are executed properly. Professional contractors have the knowledge and expertise to properly install systems such as HVAC, windows, insulation, and more. Not only do they understand the codes and regulations that must be followed, but they also use the right materials.

Finding Certified Contractors For Energy Upgrades

Using a certified contractor like Jacobs assures that you are working with a professional that is licensed, bonded, and insured with no surprises in their proposals. Certified contractors understand the necessary permits and will comply with all necessary requirements. When choosing a contractor make sure that they:

• Are in good standing with the state for more than 5 years
• Provides a minimum one-year parts and labor warranty
• Provides a free written installation estimate
• Includes all costs (permitting, electrical, dismantling and/or removal) in the written estimate
• Informs you of any rebates, tax credits, or other incentives

Documenting & Claiming Incentives

Make sure to keep all documentation and receipts of work performed to ensure the ability to claim rebates and tax incentives. Consult with your tax professional about what documentation is needed at tax time to prepare documents and ensure that you get the most back from your investment in energy upgrades