The federal Inflation Reduction Act (IRA) was passed last year, but many of its benefits were not available until 2023.
Colin Leyden, the political director of the Environmental Defense Fund, explained how all Texas residents can take advantage of major savings on electric upgrades.
The IRA was federal legislation that focused on allowing Medicare to negotiate prescription drug prices, encouraged domestic energy production, and created climate change mitigation efforts aimed at reducing emissions. As part of that effort to reduce emissions, the bill put billions of dollars toward tax credits and direct rebates for electric vehicles and home appliances that all Texans — regardless of income level — can take advantage of.
Leyden said the federal government has allocated nearly $700 million in rebates for low-income Texans to upgrade their appliances to high-efficiency electric alternatives.
“The state is slated to receive $690 million in direct rebates for people purchasing high-efficiency appliances including heat pumps, but also high-efficiency clothes dryers; weatherization for their homes, up to $1,600 for that; a high-efficiency induction electric stove, up to $840 off of that price,” Leyden said.
He added that residents can also upgrade electric panels up to $4,000 — a rebate for low-income Texans and a percentage of that as a tax credit for higher-income residents. Currently, only tax credits are available, but Leyden said the state is expected to accept the funds from the federal government and make rebates available by the end of this year.
For heat pumps, a highly efficient method to heat and cool homes, the IRA covers 50%-100% of the cost of purchasing and installing the devices, depending on income.
“These are not the heat pumps that were installed 30 or 40 years ago. They’ve made lots of technological advances,” he said. “And they operate now in much colder temperatures, but they’re also extremely efficient. So not only are you getting the potential benefit of the rebate from the IRA program, you’re also looking at long-term savings.”
Leyden added that switching to high-efficiency electric appliances wasn’t just good for the savings of individual residents, but that widespread use takes some of the load off of the state’s creaky electrical grid.
Leyden acknowledged that many major household appliances are only optional for homeowners who can change heating and cooling or ovens at their convenience. He encouraged renters to reach out to their landlords or management companies about taking advantage of replacing electric panels, cooling systems, and weatherization that would ultimately save the property owner money and reduce utility costs for tenants.
Renters can also use the rebates and tax credits to purchase small portable induction stoves, rather than replacing the large ones that typically come with a rental residence, or get window-unit heat pumps instead of replacing the entire heating and cooling system.
The IRA also offered new rebates and tax credits for electric vehicles: $7,500 for new ones and $4,000 for used ones, depending on income.
To understand what homeowners or renters may qualify for, people can use this IRA calculator created by Rewiring America, a national electrification nonprofit, by plugging in the zip code, income, tax filing status, household size, and homeowner status.
Leyden said it was difficult to overstate how important the IRA funds were.
“I really think this is going to be transformative for not only the state of Texas, but our country,” Leyden said. “I mean, this is an enormous investment in making our homes more efficient, saving Texans a lot of money, as well as generating jobs in our state.”
