How to Get a Rebate on Energy-Efficient Appliances and Home Upgrades

The Inflation Reduction Act has a rebate program for homeowners who are purchasing certain energy-efficient appliances or other upgrades, including a heat-pump water heater, a heat pump HVAC system, solar panels, and replacing gas-burning appliances like stoves.

How to find the rebates you qualify for

The Inflation Reduction Act itself is confusing, and the money is being distributed by states, counties, and local governments rather than under one unified system. That means it can be challenging to tell what rebates and discounts you might be eligible for, but there's a tool from the non-profit Rewiring America that can help you identify what programs are available to you in your area.

If you want to see which discounts and rebates you qualify for, you can enter your zip code, household size, household income, and type of residence, and the tool will sort through the myriad of programs to find ones that match with you. You'll get a list of upgrades like water heaters, solar panels, electric vehicles, and electrical panel wiring, and then you can choose the options you want to know more about. The menu will give you a summary of what funding is available for your project and what type of discount it is. To get a more complete guide to each rebate or discount, you can click on the learn more" feature.

The Federal Department of Energy also has a home upgrades section dedicated to walking homeowners through the process of applying for energy rebates. In addition to providing a search tool that can be sorted by state, the website also provides a list of specific upgrade projects that you can search for eligibility. Since there's no one set of guidelines for who qualifies or which specific upgrades are eligible, the website can help you untangle the specifics for your state and particular project.

Other things to keep in mind

If you're planning on replacing your water heater, you could qualify for up to $2,000 in rebates to install it. The rebate is a 30% tax credit, capped at a certain amount depending on your state, on an electric heat pump or heat pump water heater. To find a qualifying appliance, you can look for an Energy Star logo. While there's no rule that says states must use the same qualifications as Energy Star, that certification is the federally recognized standard for efficiency, so it's a good place to start.

If you're having a new heat-pump water heater installed or opting for an electrical panel upgrade, consult with your contractor first to make sure the upgrade you're doing is right for your home. You might also learn about other rebates or discounts you weren't aware of from a professional electrician or HVAC technician.

In addition to getting you a tax rebate worth up to $2,000, your heat pump upgrade can save you money on utility bills. On average, a water heater will account for about 20% of your home's energy usage, according to Energy Star. A heat-pump water heater can save a household of four about $550 per year, or $5,600 over its lifetime in energy savings.