Ultimate Guide to the Inflation Reduction Act

The Latest Information on the IRA

In 2022, the Inflation Reduction Act (IRA) was passed in the US which passes rebates, tax credits, and savings straight to your clients for necessary upgrades, including home insulation. By helping them understand the ways in which they can make energy-saving updates while receiving rebates and tax credits, you can more easily close deals.

For individual state allowances through the IRA, please contact your local IDI location.

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Incentives by Household Income

State incentives may be decided based on household income. Income is determined as:

● Low-income households are at or below 80% of the Area Median Income, including those qualifying for WAP at under 200% of the Federal Poverty Line

● Moderate-income households are between 80% and 150% of the Area Median Income

● Market rate households have an income of over 150% the Area Median Income

Though funding options will vary state by state, based on existing state and utility programs, understanding these household income levels will be vital in offering stackable rebates and tax credits so your customers receive the greatest amount of money possible. Combining federal, state and utility dollars will be a valuable tool to help homeowners benefit from these programs.

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What Is the Inflation Reduction Act?

The US Inflation Reduction Act (IRA) was passed in August 2022 with the goal of lowering the cost of living for American families. According to the IRS, “The Inflation Reduction Act covers new and reinstated tax laws that will affect individuals and businesses, including a number of credits and deductions.”

The IRA bill aims to lower costs for families, while combating climate change through financial support for individuals and businesses to retrofit, and build healthier buildings that use less energy. This has a positive impact on the insulation industry in two specific ways:

Commercial Tax Credits

The first portion of the Inflation Reduction Act will impact the insulation industry by extending pre-existing national tax credits that were set to expire, providing more incentives for commercial building owners who want to improve the energy efficiency of their building(s).

45L Tax Credit will provide a $2,500.00 credit for all new or substantially reconstructed residential and multi- family buildings that meet ENERGY STAR certification, or$5,000.00 for those that meet DOE Zero Energy Ready Home (ZERH) program requirements.
179D Tax Credit will be made available to new-build or extensive-retrofit commercial buildings. Business owners will receive a tax credit between $1.88 and $5.00 a square foot. The amount is determined by the percentage improvement against a baseline model, increasing incrementally. For those that meet wage and apprenticeship requirements, a bonus deduction will be made available.

Residential Tax Credits

The second portion of the Inflation Reduction Act will provide homeowner rebates on a state-approved basis through a number of new programs. The specifics for each vary from state to state. If you live in a state that hasn’t accepted the new IRA rebates, we recommend reaching out to the Building Performance Association (BPA), which is leading an affiliate model program across the country to make our voices heard.

25C Tax Credit will increase to 30% or up to $1,200.00 of job material costs with no lifetime cap through the year 2023 for residential retrofits. Homeowners and those who own residential multi-unit buildings can plan ongoing retrofits that will help the energy efficiency of their properties and continue to receive tax credits every year through 2032.
45L Tax Credit will provide a $2,500.00 credit for all new or substantially reconstructed residential and multi- family buildings that meet ENERGY STAR certification, or $5,000.00 for those that meet DOE Zero Energy Ready Home (ZERH) program requirements.
HOMES (Home Owner Managing Energy Savings) Rebate Program will provide an average incentive of $2,000.00 for 20% increased energy efficiency and $4,000.00 for 35% increased energy efficiency. To receive the rebate, a contractor will do an energy assessment of the home, design a retrofit package and model the savings projected.
High-Efficiency Electric Home Rebate Program includes up to $14,000 for electrification, which includes up to $1,600.00 for air sealing and insulation.
Weatherization Assistance Program provides rebates for homes owned or occupied by low-income persons, including an average of about $8,000.00 of funding perhouse or apartment to improve the dwelling, reducing total residential energy expenditures.

Stay Competitive With IDI’s Classes and Training

Because the Inflation Reduction Act bill requires extensive knowledge and reporting on the ways in which a project positively impacts the energy performance of a building, it’s important that your team of insulation installers is prepared with the latest best practices. Whether your team has years of experience or is new to the insulation business, IDI’s classes and training will help you stay ahead of the competition while providing a valuable service to your employees.

IDI’s comprehensive training classes cover the complete insulation process, wholesale fiberglass insulation, building science and codes, health and safety training, and everything else you need to increase your productivity and profits. Get help navigating the IRA guidelines and ensure your team is prepared to aid new clients with IDI’s classes and training.

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