What is the Inflation Reduction Act?

The Inflation Reduction Act (IRA) includes funding to support clean energy and climate initiatives through tax credits and deductions related to energy efficiency, clean electricity, clean fuels, manufacturing and low or no-emissions vehicles.

These tax incentives are intended to encourage homeowners to invest in energy-efficient systems and reduce their annual energy costs and carbon footprint.

Starting Jan. 1, 2023, new federal tax credits will be in place for 10 years—through 2032.

What types of energy efficiency home improvements may qualify for tax credits?

Qualifying home improvements include:

• Heat pump water heaters
• Heat pumps
• Biomass stove/boilers
• Insulation
• Windows/Skylights
• Exterior doors
• Central air conditioners
• Natural gas, oil, propane water heaters
• Natural gas, oil, propane furnaces/boilers
• Electric panel upgrades
• Home energy audits

Make sure to bookmark ENERGY STAR’s page on Federal Tax Credits for more information and updates.

Who can claim the tax credits?

You may claim the credits for improvements to your main home. Your main home is generally where you live most of the time.

For the energy efficiency home improvement credit, the home must be:

• Located in the United States
• An existing home that you improve or add onto, not a new home

In most cases, the home must be your primary residence. Note that you cannot claim a credit for a property where you do not reside.

Is there a maximum tax credit?

The credit applies to improvements made on or after Jan. 1, 2023, and before Jan. 1, 2033.

The maximum credit you can claim each year is:

• $1,200 for certain energy property costs and energy efficient home improvements, with limits on doors, windows and home energy audits.
• $2,000 per year for qualified heat pumps, biomass stoves, or biomass boilers

The maximum annual credit for eligible improvements can be claimed each year until 2033 without any lifetime dollar limit.

The credit is nonrefundable, so you can't get back more on the credit than you owe in taxes. You also can't apply any excess credit to future tax years.

Source: Energy Efficient Home Improvement Credit | Internal Revenue Service (irs.gov)

If an appliance or a piece of equipment does not meet the criteria for tax credits or deductions, can they still qualify for BGE rebates?

Yes, if the measures are part of our rebate program and you meet all submission criteria for the BGE rebate.

Does the Inflation Reduction Act money replace the utility rebates?

No, the utility rebate program is funded through the EmPOWER Maryland Act and is a separate source of funding.

Can I apply for a BGE rebate and the Inflation Reduction Act tax credit?

It is recommended that you consult your tax professional to ensure you have all necessary documentation.

Can BGE or my contractor help me get the Inflation Reduction Act tax credits?

Given the IRA directs the IRS to create tax credits for certain energy efficiency measures, we recommend consulting your tax professional.

Please contact a tax professional, CPA or the Internal Revenue Service (IRS) to confirm details specific to your qualifications and eligibility.