New Home Energy Rebates Provided by the Inflation Reduction Act of 2022

This was a historic year for home energy conservation and carbon emission reduction in the United States. On August 16, 2022 President Joe Biden signed the Inflation Reduction Act (IRA) that provides unprecedented home energy rebates to help low- and moderate-income families convert gas appliances and furnaces to cleaner electric versions.

Using clean electricity instead of burning fossil fuels will reduce carbon emissions by a projected 200 million metric tons by 2045.

Individual states will administer the rebates. Specific guidelines home energy rebates are still being worked out by the state governments.

Rebates are projected to be available in some states as early as March of 2023.

Bookmark this page and check back for updates on home energy rebates provided by the 2022 IRA.

Details About Home Energy Rebates in the 2022 Inflation Reduction Act

The 2022 IRA provides up to $14,000 in rebates for qualified “electrification” projects. These rebates are only available to households earning less than 150 percent of their area’s annual median income.

  • Low-income households who earn less than 80 percent of annual median income can get rebates for 100 percent of electrification projects up to $14,000.
  • Median-income households who earn between 80 – 150 percent of annual median income can get rebates for 50 percent of electrification projects up to $14,000.

Components of electrification projects that qualify for rebates include:

  • Replacing a gas furnace with an electric heat pump–up to $8,000.
  • Replacing a gas water heater with a heat pump water heater—up to $1,750.
  • Replacing a gas dryer with a hybrid heat pump clothes dryer—up to $840.
  • Replacing a gas range or cooktop with an electric version—up to $840.
  • Upgrades to windows, doors and home insulation that reduce home energy use—up to $1,600.
  • Up to $4,000 for updating the electrical breaker box to accommodate the new electrical appliances.
  • Up to $2,500 for home wiring revisions to install the new electrical appliances.

Frequently Asked Questions About IRA Rebates

Information about the Inflation Reduction Act rebates is still emerging. Here are answers to frequently asked questions about IRA rebates based on current information.

How Can I Find My Area’s Median Income?

Use the Fannie Mae Area Median Income Lookup Tool to get an idea of the median income in your area. For example, the median income of households in the St. Louis area is $96,800.

If you live in that area, you would qualify for 100 percent rebates if your household earns less than $77,440 (80 % of $96,800 median income). Households earning between $77,440 and $145,200 would qualify for the 50 percent rebate of qualified IRA electrification projects.

These are general guidelines and examples. Specific guidelines for IRA rebates are still being worked out by individual state governments. Check back for more information as new details about IRA rebates emerge.

Image showing how a heat pump works

What Is a Heat Pump?

A heat pump HVAC system works like an air conditioner in the summer and reverses refrigerant flow in winter to heat your home.

Heating Mode

When the HVAC compressor compresses refrigerant, the refrigerant gets hot. The system circulates the hot refrigerant through the evaporator fins inside your home. The blower fan circulates inside air through the evaporator to heat the air inside your home.

When the hot refrigerant can’t provide the heat needed to keep your home comfortable, an electric heating element turns on to supplement refrigerant heating.

Cooling Mode

The compressor compresses refrigerant and sends the hot refrigerant through the outside condenser unit to cool down the refrigerant. The cooled down refrigerant travels to the inside unit in your home. The refrigerant passes through an orifice to make a fine mist that enters the evaporator. The refrigerant mist absorbs heat from the evaporator and cools the air circulated through the evaporator by the blower fan.

How Does a Heat Pump Water Heater Work?

A heat pump water heater use hot refrigerant gas as the primary heat source for heating water inside the water heater tank. A compressor is positioned at the top of the water heater runs to compress and heat the refrigerant. The refrigerant flows down through heat exchanger tubes inside the water heater tank and heats the water. The refrigerant then flows through an evaporator heat exchanger on top of the water heater to cool the refrigerant down. Next, the refrigerant flows back to the compressor and the heating cycle repeats.

When hot water demand exceeds the refrigerant systems ability to heat water, standard electric water heating elements turn on to heat water.

Image of ventless heat pump dryer

How does a heat pump dryer work?

A heat pump dryer uses hot refrigerant gas to heat the clothes and cooler refrigerant to dehumidify the air that flows through the clothes during the drying cycle. Many heat pump dryers are ventless. Here’s how the dryer works.

  • The compressor compresses refrigerant which heats up the fluid.
  • The refrigerant flows from the compressor through the condenser heat exchanger.
  • A fan blows air through the condenser heat exchanger and into the dryer drum to heat the clothes and cool the refrigerant. A small electric heating element also helps heat the air as needed.
  • Warm moist air flows out of the drum and through the evaporator.
  • Refrigerant in the evaporator dehumidifies the exhaust air. Moisture removed from the clothes drips down into a drain sump. When the drain sump gets full, a drain pump sends the water to the washer drain.
  • Refrigerant returns to the compressor and air goes back through the condenser heat exchanger to repeat the drying cycle.

The drying cycle in a heat pump dryer takes longer but uses much less energy than a conventional dryer. Also, the clothes don’t get as hot in a heat pump dryer because the dehumidifying process removes moisture from the clothes instead of just hot air flowing through the clothes and out an exhaust vent.

Because a heat pump dryer recycles exhaust air, getting a ventless heat pump dryer will eliminate the hassle of cleaning a dryer vent and will save you money on energy bills.

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