this article is reprinted by permission from nerdwallet if you’ve been holding off on home improvements a new law signed last year and now in effect as of jan 1 2023 may provide a fresh incentive the inflation reduction act or ira includes tax credits and rebates for homeowners who make energysaving updates to their homes credits for improvements like new solar panels windows doors and air conditioners are available now while rebates for larger energyefficient updates are expected to become available later this year or next year here’s what to know about these perks plus tips to plan your projects the ira includes tax credits for aroundthehouse ecofriendly updates eligible purchases include energyefficient windows doors insulation central air conditioners and home energy audits an irs fact sheet outlines eligible home improvements tax credits reduce your tax liability for the year says los angelesbased certified public accountant michael dibernardo for example a 500 credit lowers your taxes owed by 500 the new law allows homeowners a 30 tax credit for some energyefficient updates capped at 1200 per year there’s also a 2000 credit for heat pumps heat pump water heaters and biomass stoves make the most of it combining projects like new insulation and a heat pump can get you up to 3200 says kara saul rinaldi president and ceo of the energy and environmental strategy firm anndyl policy group and an advocate of policies that helped shape the ira keep receipts for each eligible update and add them to your tax forms saul rinaldi says check out dear tax guy i just started renting my house out on airbnb what incometax deductions can i claim on this property the ira also increased the credit for solar installations homeowners can get a tax credit for 30 of the cost to buy and install solar panels up from the previous 26 and there’s no dollar limit if you pay 15000 to put solar panels on your house you can claim a 4500 tax credit any unused credit carries to future years so if you don’t owe taxes this year you can use it later make the most of it the tax credit will reduce the cost of going solar but if your goal is to lower your utility bill first determine when you’ll see savings this often depends on how much you currently pay says duane knickerbocker owner of brower mechanical a sacramentobased company that helps homeowners optimize energy use the average payback period for solar panels is six to nine years according to the center for sustainable energy a policy and research firm read more want a rebate to upgrade home electric or swap to solar there’s good news and bad news the “difference makers” in the ira are two new rebates knickerbocker says one program offers up to 8000 for lowering the home’s energy use and the other provides up to 14000 for electrification updates like appliances and breaker box upgrades unlike the credits the rebates are designed to be offered at the point of sale low to moderateincome households defined in the ira as those with total annual incomes of less than 80 of their surrounding area’s median are eligible for larger rebates than those with higher incomes even if you don’t usually owe taxes and can’t use the ira credits the rebates mean you can still get a discount on energyefficient updates saul rinaldi says make the most of it it’ll be months at least before homeowners can get the rebates in the meantime consider a home energy audit to determine which projects to start once the rebates are available then work the savings into home improvement plans for this year and next saul rinaldi says learn more here’s a rundown of how the inflation reduction act will affect your energy bills investments and drug costs the cost of some home improvements could diminish the ira tax incentives here are ways to supplement financing for your project other assistance the north carolina clean energy technology center manages a database of state and local incentives that includes resources like solar installation rebates and lowinterest loan programs a 0 interest credit card a 0 annual percentage rate or apr credit card may be just as good as cash if you pay it off during the nointerest period says travis gatzemeier a certified financial planner based outside of fort worth texas good or excellent credit is usually required to qualify home equity if you have equity consider a home equity loan or line of credit to finance larger updates like new solar panels rates are often lower than personal loans and credit cards but your home is collateral for the loan personal loans unsecured personal loans are a fast way to cover home updates and repairs some lenders provide funds the same or next day after approval