Inflation Reduction Act provides new opportunities for customers to save on energy efficient home improvements

Tacoma Public Utilities’ Director Jackie Flowers, together with Tacoma Power Superintendent Chris Robinson, met with U.S. Representative Marilyn Strickland this morning hosted at the home of a Tacoma Power customer who previously benefited from the utility’s incentives for heat pump purchases. Heat pumps can be an energy efficient way to heat your home, reducing your bills in the winter and conserving energy.  

Tacoma Power has been offering customers incentives for purchases on items like heat pumps for years; Congresswoman Strickland came to highlight the new opportunities for homeowners to save money on the purchase of heat pumps through the Inflation Reduction Act (IRA). The IRA was signed into law on Aug. 16, 2022, and was designed to, among other things, help improve energy efficiency in homes. Here’s a rundown of all the ways the IRA offers additional benefits to Tacoma Power homeowners: 

  • Energy Efficient Home Improvement Credit: From 2023-2032, this tax credit is for 30% of the total cost of energy-efficient home improvements, such as a heat pump, and has a $1,200 annual limit (this limit is expanded up to $2,000 if for a heat pump). This is a big change as the previous Non-business Energy Property Credit (25C) expired in 2022 and was a 10% credit with a lifetime limit of $500. The IRA extends the 10% credit through 2022. For the new Energy Efficient Home Improvement Credit: 
    • Heat pump must be Consortium for Energy Efficiency’s (CEE) highest tier for efficiency 
    • Any taxpayer can receive it, regardless of income 
    • Other eligible upgrades for this credit include biomass heaters, doors/windows, air-sealing materials or systems, home energy audit, and upgrading your electrical supply if it’s required for efficiency projects 
  • High-Efficiency Electric Home Rebate Program: Lower and middle-income homeowners are eligible for up to $1,750 for a new heat pump water heater and $8,000 for a heat pump for space heating and cooling. The rebate program will be administered by states. 
    • There is no minimum efficiency requirement, but states could implement their own 
    • Rebate eligibility scaled by state median income:  
    • Less than 80% of state median household income, eligible for 100% of the rebate 
    • 80-150% of state median income, eligible for 50% 
    • Over 150% of state median income, not eligible for a rebate 
    • This program will be rolled out by the Department of Treasury and states. It may be mid-2023 before rebates are in place.  

The IRA also expanded other tax credits for homeowners looking for ways to improve energy efficiency, such as:  

  • Residential Clean Energy Credit: The Residential Clean Energy Credit, which is now extended through 2034, was previously called the Residential Energy Efficient Property Credit (25D). This credit is for installing clean household energy such as solar, wind, or geothermal. The IRA raises it from the previous 26% up to 30% for years 2022 through 2032. It then falls to 26% for 2033 and 22% for 2034. 
  • State rebates: $1,600 for insulation, air sealing, and ventilation; $4,000 for upgrades to your electrical panel and service; and $2,500 for electrical wiring. 

Director Flowers and Superintendent Robinson also talked to Congresswoman Strickland about a new program Tacoma Power is launching soon – the Income-Qualified Rental Program which introduces new incentives for energy efficiency in rental properties. Details about that program will be formally announced later in September. Want to learn more about Tacoma Power’s home upgrade incentives? See what you qualify for at 

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