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Tax credits and rebates are available to North Carolinians seeking to reduce their energy costs, many of which are part of the 2022 Inflation Reduction Act. These include the Energy Efficient Home Improvement Tax Credit, which assists homeowners with improvements like installing energy-efficient insulation, windows, doors, and electric heat pumps. There are also incentives for installing rooftop solar panels, purchasing electric vehicles, and implementing energy-efficient home appliances and systems, with varying eligibility requirements and benefits.
Tax credits and rebates to lower energy costs for North Carolinians
As tax season approaches with the new year, North Carolinians can take advantage of various tax credits and rebates that can help to reduce energy costs. The Inflation Reduction Act (IRA) 2022 establishes several tax credits and consumer rebates to decrease the cost of clean energy technologies.
Energy Efficient Home Improvement Tax Credit
The average American spends $2,000 annually on energy bills. Now, the Energy Efficient Home Improvement Tax Credit is designed to offset the cost of home improvement projects like installing energy-efficient insulation, doors, windows, and electric heat pumps. This can result in lower heating bills and reduced greenhouse gas emissions.
Qualification for this tax credit depends on the type of projects homeowners undertake. Caps exist on the amount you can claim in credits. Taxpayers can claim a maximum overall credit of $3,200 per year. A detailed fact sheet by the IRS provides specific examples of overall tax breaks for different projects.
Rooftop solar
Installing rooftop solar panels can generate clean energy and save costs. The IRA offers a tax credit that covers 30% of solar panel installation with no cap. A six kilowatt solar installation costs around $19,000, so the average solar tax credit would be about $5,700. You can qualify for this tax credit if your solar energy system was installed after Jan. 1, 2017 or if your solar energy system is located at your US residence.
Electric vehicles
The federal electric vehicle tax credit offers consumers up to $7,500 off the purchase of an electric vehicle. The income limit is $150,000 annually for single filers and $300,000 per year for joint filers. This tax credit only applies to electric vehicles assembled in North America and does not cover vehicles costing more than $55,000, or trucks and vans costing more than $80,000.
State-level savings
On a state level, North Carolina offers ways for homeowners to save money by making their property more energy-efficient. North Carolina exempts 80% of the appraised value of a solar energy system from property tax. The state’s Weatherization Assistance Program awards grants to low-income residents for energy-saving home repairs.
Coming in 2025
The state is implementing the NC Home Energy Rebate Program, set to launch in 2025. The IRA has provided over $209 million to create rebate programs that cover up to 80% of whole-home energy efficiency projects and 100% of energy-efficient home appliance costs. These programs will cover eligible energy savings retrofits started on or after Aug. 16, 2022.
Other options
A range of other tax credits and rebates are available through the IRA. For example, in rural areas, the 30C Alternative Fuel Infrastructure Tax Credit can get you $1,000 off installation costs for an electric vehicle charging station. For a complete list of available credits and rebate programs, click here.
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